Deposit rates rise as banks fight for funds

ET BureauLast Updated: Aug 01, 2026, 07:30:00 AM IST

Synopsis

Banks increased fresh term deposit rates in June, led by private lenders. The average domestic term deposit rate rose to 5.99% for scheduled commercial banks. Private banks saw a significant 27 basis point increase in their deposit rates. Public sector banks also raised rates by 7 basis points. Their average deposit rate remained higher than private sector offerings.

Mumbai: Banks raised rates on fresh term deposits in June, led by private-sector lenders, as intensifying competition for funds and faster loan growth forced them to offer higher returns to depositors.

The weighted average domestic term deposit rate on fresh rupee deposits for scheduled commercial banks increased 16 basis points month-on-month to 5.99% in June 2026, according to Reserve Bank of India (RBI) data. One basis point is a hundredth of a percentage point.

Private-sector banks led the increase, raising their average fresh term-deposit rate by 27 basis points to 6.21% from 5.94% in May.

Public-sector banks increased rates by 7 bps to 6.40%, although their average deposit rate remained higher than that offered by private banks.

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