Deutsche Bank raises deposit rates by up to 1.50 per cent

Close on the heels of the Reserve Bank of India (RBI) taking steps to squeeze out liquidity, German lender Deutsche Bank on Friday raised deposit rates by up to 1.50 per cent, joining domestic banks like HDFC Bank, Yes Bank and Axis Bank.

The lender increased the interest rate offering on the 100 days and 101 days to 180 days buckets to 8.50 per cent, it said in a statement in Mumbai.

Revised rates are applicable from July 31, it said. The move follows domestic private banks, including 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, 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 RBI put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25 per cent and restricting access by way of repo window.

The apex bank also conducted open market sales of government securities worth Rs 2,500 crore on July 18, the RBI review said.

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 per cent of their total deposits in overnight borrowings and maintain a 99 per cent average cash reserve ratio every day.