Several prominent banks, including ICICI Bank, HDFC Bank, Bank of India, Federal Bank, and Yes Bank, have recently increased their fixed deposit (FD) interest rates. These revisions come in the days leading up to the Reserve Bank of India's (RBI) forthcoming Monetary Policy Committee (MPC) announcement, slated for December 8, 2023. Experts anticipate that the central bank will likely keep the repo rate unchanged in its upcoming MPC review.
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Banks that have raised their FD rates
ICICI Bank
Private lender ICICI Bank has restructured its FD interest rates for deposits ranging from ₹2 crore to ₹5 crore, effective December 6, 2023. The revised rates span from a minimum of 4.75% for a tenure between 7 to 14 days to 7.25% for a period extending from 390 days to 15 months.
Here's a look at FD rates of ICICI Bank on deposits of ₹2 crore and above but less than ₹5 crore:
| Tenure | Rates for general citizens | Rates for senior citizens |
| 7 days to 14 days | 4.75% | 4.75% |
| 15 days to 29 days | 4.75% | 4.75% |
| 30 days to 45 days | 5.50% | 5.50% |
| 46 days to 60 days | 5.75% | 5.75% |
| 61 days to 90 days | 6.00% | 6.00% |
| 91 days to 120 days | 6.50% | 6.50% |
| 121 days to 150 days | 6.50% | 6.50% |
| 151 days to 184 days | 6.50% | 6.50% |
| 185 days to 210 days | 6.65% | 6.65% |
| 211 days to 270 days | 6.65% | 6.65% |
| 271 days to 289 days | 6.75% | 6.75% |
| 290 days to less than 1 year | 6.75% | 6.75% |
| 1 year to 389 days | 7.25% | 7.25% |
| 390 days to < 15 months | 7.25% | 7.25% |
| 15 months to < 18 months | 7.05% | 7.05% |
| 18 months to 2 years | 7.05% | 7.05% |
| 2 years 1 day to 3 years | 7.00% | 7.00% |
| 3 years 1 day to 5 years | 7.00% | 7.00% |
| 5 years 1 day to 10 years | 7.00% | 7.00% |
| 5 Years (80C FD) – Max to `1.50 lac | NA | NA |
(Source: ICICI Bank)
Bank of India
Bank of India, has also joined the trend by increasing its FD rates, primarily targeting deposits from ₹2 crore and above to less than ₹10 crore. This revision, effective December 1, 2023, ranges from 5.25% for a tenure between 46 to 90 days to a substantial 7.25% for a tenure of 1 year.
Here's a look at the FD rates of the Bank of India on deposits from ₹2 crore and above to less than ₹10 crore:
| Tenure | Rates for general citizens |
| 7 days to 14 days | 4.5% |
| 15 days to 30 days | 4.5% |
| 31 days to 45 days | 4.5% |
| 46 days to 90 days | 5.25% |
| 91 days to 179 days | 6% |
| 180 days to 210 days | 6.25% |
| 211 days to 269 days | 6.5% |
| 270 days to less than 1 year | 6.5% |
| 1 Year | 7.25% |
| Above 1 Year to less than 2 Years | 6.75% |
| 2 Years | 6.5% |
| Above 2 Years to less than 3 Years | 6.5% |
| 3 Years to less than 5 Years | 6% |
| 5 Years to less than 8 Years | 6% |
| 8 years & above to 10 Years | 6% |
(Source: Bank of India)
HDFC Bank
HDFC Bank, another major player, has adjusted its FD rates for non-withdrawable fixed deposits, offering returns of up to 7.45% for tenures spanning one to two years and 7.2% for durations extending from two to ten years. Non-withdrawable fixed deposits lack a premature withdrawal facility, meaning depositors cannot close them before the designated term.
Here's a look at the FD rates of HDFC Bank on deposits from ₹2 crore and above to less than ₹5 crore:
| Tenor | Interest rates |
| 90 days <= 6 months | NA |
| 6 months 1 day <=9months | NA |
| 9 months 1 day to < 1 Year | NA |
| 1 Year to < 15 months | 7.55% |
| 15 months to < 18 months | 7.55% |
| 18 months to < 21 months | 7.45% |
| 21 months to 2 years | 7.45% |
| 2 years 1 day to 3 years | 7.20% |
| 3 years 1 day to 5 years | 7.20% |
| 5 years 1 day to 10 years | 7.20% |
(Source: HDFC Bank)
Federal Bank
Federal Bank also re-evaluated its deposit rates, with an increase to 7.50% for a 500-day tenure for both residents and non-resident deposits, and a lucrative 8.15% for senior citizens. The rates for other tenures were also adjusted accordingly.
| Tenure | Withdrawable before maturity (Less than ₹2 crore) | Non-withdrawable before maturity (Above ₹1 crore – less than ₹2 crore) | ||
| General Public | Senior Citizen | General Public | Senior Citizen | |
| 500 Days | 7.50% | 8.00% | 7.65% | 8.15% |
| Above 21 Months to less than 3 years | 7.05% | 7.55% | 7.30% | 7.80% |
The interest rates on Foreign Currency Non-Resident Account (FCNR) and Resident Foreign Currency (RFC) have also been hiked. Here are the revisions:
| Tenure | ||
| Less than ₹10 Lakh | ₹10 lakh and above | |
| 1 year 1 day | 6.10% | 6.15% |
| 1 year | 5.60% | 5.60% |
| 1 year 2 days to less than 15 months | 6.00% | 6.00% |
| 15 months to less than 2 years | 5.45% | 5.45% |
The scenario
The recent surge in FD rates by banks can be attributed to the delayed transmission of RBI's policy rate hikes. The RBI's benchmark policy rate (repo) has remained unchanged for the past four bi-monthly monetary policies, standing at 6.5% since February 2023. However, the central bank earlier implemented six consecutive rate hikes, totalling 250 basis points, until the pause in April.
Though repo rates have risen, the subsequent adjustment in bank deposit rates has been gradual, as indicated by RBI governor Shaktikanta Das in the last policy review. Banks initially lagged in increasing their FD rates following the RBI's policy actions, leading to a subsequent catch-up phase.
This trend indicates that banks are now aligning their FD rates with the policy rate hikes, responding to the potential for further rate hikes by the RBI. Consequently, depositors may continue witnessing adjustments in FD rates as banks aim to bridge the gap between policy actions and their interest rate policies, experts say.
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