The liquidity situation may be comfortable, but banks have started building up their balance sheets ahead of the financial year-end to meet yearly targets.This has resulted in a spike in bulk deposit rates as banks are offering as much as 9.4-9.6 per cent as compared to the card rate of 9 per cent for one-year deposits. Bulk deposits are typically Rs 10 crore (Rs 100 million) and above.
Canara Bank, for example, has sealed a Rs 500-crore (Rs 5 billion) bulk deposit deal of one-year maturity with an Andhra Pradesh-based PSU for 9.61 per cent. Similarly, Bank of Baroda offered 9.41 per cent for a Rs 200-crore deal. The card rate for deposits of similar maturity is 9 per cent.
Banks have taken this aggressive posture even as liquidity has become comfortable on the back of increased government spending.
On Wednesday, banks borrowed close to Rs 21,000 crore (Rs 210 billion) from the repo window, the lowest in the last month and a half, while borrowing from the marginal standing facility (MSF) was a mere Rs 395 crore (Rs 3.95 billion) on Tuesday. In the last one month, the daily average borrowing under the MSF was below Rs 4,000 crore (Rs 40 billion) as compared with almost Rs 10,000 crore (Rs 100 billion) a month ago.
Some banks say deposit mobilisation will be required to meet credit demand, which is expected to peak in the last quarter of the financial year.
Manipal-based Syndicate Bank has announced a 25-bp hike in its retail deposit rate across some maturities and launched a new deposit scheme offering 9.25 per cent for 444 days.
“Some of our deposits are coming up for renewal. In addition, there is credit demand in the pipeline, which will be disbursed in the current quarter,”