Banks have now begun to raise their deposit rates, following the Reserve Bank of India’s (RBI) hike in the repo rate last week. On Tuesday, State Bank of India (SBI) and IDBI Bank announced an upward revision on domestic term deposits by 15-25 basis points across different tenors.

Other lenders are expected to follow suit in the coming days after having increased lending rates, which included those linked to an external benchmark and the marginal cost of funds-based lending rate (MCLR).

Last week, Kotak Mahindra Bank announced a 0.50 per cent increase in savings account interest rate for deposits of over Rs 50 lakh to 4 per cent.

On Monday, Bajaj Finance Ltd, the non-banking finance company, said it has raised fixed deposit interest rates on various tenors — 24-60 months — by up to 20 basis points (0.20 per cent).

Bankers added that the increase is reflective of the upward interest rate trend in the system. Though it brings good news to those, particularly senior citizens depending on interest income, their real return is negative when adjusted for inflation.

SBI said interest rates have been raised by 20 basis points on domestic term deposits of below Rs 2 crore for select tenors. The revised interest rates on these retail domestic term deposits come into effect from June 14.

For deposits of 211 days to less than 1 year, the revised interest rate stands at 4.60 per cent, against 4.40 per cent earlier. Senior citizens will be offered an interest of 5.10 per cent against 4.90 per cent earlier by the bank.

For domestic term deposits of 1 year to less than 2 years, the interest rate stands at 5.30 per cent, up 20 basis points. For senior citizens, the interest rate will be higher by similar margin at 5.80 per cent.

On tenor of 2 years to less than 3 years, SBI has raised the interest rate to 5.35 per cent from 5.20 per cent.