Close on the heels of the Reserve Bank of India (RBI) taking steps to squeeze out liquidity, German lender Deutsche Bank today raised deposit rates by up to 1.50 percent, joining domestic banks like HDFC Bank, Yes Bank and Axis Bank.
In a statement issued here, the bank announced an increase in the interest rate offering on the 100 days and 101 days to 180 days buckets to 8.50 per cent, the revised rates being applicable from July 31.
The move follows domestic private banks Yes Bank, HDFC Bank and Axis Bank, which have upped rates by up to 4 per cent because of the tight liquidity conditions.
In order to contain rupee depreciation, the RBI has taken slew of measures in the past couple of weeks resulting in the tight liquidity situation for the banks.
The decline of the rupee to a record low of 61.21 against the dollar on July 8 forced the RBI to take a series of unconventional measures to curtail liquidity and curb speculation.
On July 15, the Reserve Bank put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25 percent.
The central bank also conducted open market sales of government securities of Rs 2,500 crore on July 18, accoring to an RBI review.
As a contingency measure, the central bank opened a dedicated special repo window for a notified amount of Rs 25,000 crore for liquidity support to mutual funds that face redemption pressure.
On July 22, the RBI rationalised import of gold by making it incumbent on all nominated banks to ensure that at least one-fifth of the imported metal is exclusively made available for the purpose of exports.
A day later, the RBI directed banks to draw only 50 percent of their total deposits in overnight borrowings and maintain a 99 per cent average cash reserve ratio everyday.