The country's largest lender SBI on Friday upped its interest rates on term deposits by up to 0.80 per cent amid a 'war for deposits' in the banking system.

Fixed deposits of under Rs 2 crore for a period of over 211 days but less than 1 year will earn an interest of 5.50 per cent from October 22, as against 4.70 per cent earlier.

For other maturities, the quantum of the rate hike is lower at 0.25-0.60 per cent, while the 7-45 days deposit rate has been left untouched at 3 per cent per annum, as per a statement.

Credit growth in the system has touched 18 per cent, as per the latest data, while deposits are still trailing by barely touching the double-digit mark amid rate hikes by the RBI to tame inflation.

Lenders have been depending on market-linked instruments on the liability management side as well.

Some of the banks which have announced their numbers for the September quarter have reported that deposit growth has been trailing by a wide margin, leading some bankers to opine that there is a 'war for deposits' in the system.