Bandhan Bank has raised its Fixed Deposit rates by up to 20 basis points, taking senior citizen yields to nearly 8%. The move comes without any change from the RBI, which has kept the national repo rate unchanged.
The rate hike reflects a deposit mismatch building inside the banking sector. Credit growth is running fast as consumers and corporations borrow at record pace, forcing banks to source more cash to fund new loans.
At the same time, retail investors are moving money out of savings accounts and into mutual funds, SIPs, and equities, reducing the deposit base banks rely on to fund lending.
With loan growth outpacing deposit collection, banks are turning to higher FD rates as a tool to pull retail liquidity back into the banking system.
