The deposit rates of PSBs are moving up in tandem with their tenures, whereas most private and foreign banks seem to be discouraging medium- and long-tenure deposits by paying lower interest rates for deposits over 13 months compared with their short-term rates.
A foreign player like HSBC currently pays 7.5% for its 400-day fixed deposit scheme, while the interest rates for 401 days to 18 months are as low as 6.75%. In the private sector, ICICI Bank offers an interest rate of 8% for a 390-day deposit, while for the tenure of 391 days to two years, the bank offers an interest rate of 6.75%.
On the other hand, a public sector player like Bank of India has a scheme where it offers an 8% interest rate for the long-tenure (8 to 10 years) deposit. Even Union Bank of India has recently launched a scheme, offering an 8% interest rate for 8-year and 9-month deposits.