Competition may push deposit rates up over 100 bps by December: Bankers

There is, however, room for the deposit rates to rise, with the average one-year deposit rate for banks standing at 5.41 per cent

Banks are bracing for another round of increase in interest rates, especially in garnering deposits amid stiff competition, with the market pencilling in at least a 50-basis-point (bp) hike in the repo rate in the monetary policy review next week.

Bankers said while policy rates could rise by at least another 50 bps, the chase for deposits could see interest rates on term deposits, including big ticket certificates of deposit (CDs), grow by over one per cent (100 bps).

Credit offtake was high in the June quarter, a period that is generally seen as being soft because of lower demand, widening the