Aggressive deposit rate hikes and bulk deposits towards the end of the third quarter helped the banking system push up deposit growth. Deposits grew by Rs 17,1601.71 crore, taking the annual rate of growth to 16.45 per cent in the fortnight ended December 31, 2010.
This could be indicative of more and more people preferring bank fixed deposits as an investment avenue in response to the recent rate hikes. In the third quarter, interest rates on deposits have gone up by almost 250 basis points due to cash-starved banks competing with each other to attract funds. However, this could be a combination of a rise in both bulk deposits as well as retail deposits as banks usually resort to taking up short-term bulk deposits towards the quarter end to shore up their balance sheets. crackcrack