SBI, Axis Bank hike deposit rates In good news for depositors before the new year, State Bank of India (SBI) and Axis Bank have raised interest rates on fixed deposits by up to 50 basis points (bps) across various tenors. SBI has increased rates across various tenures, excluding FDs maturing within one year to less than 2 years, 2 years to less than 3 years, and 5 years to 10 years. “We had not increased interest rate for sometime in shorter terms. We had some elbow room available, so we have only calibrated rates,” Dinesh Khara, chairman, SBI told FE. “In longer tenor, we had already increased sometime back so there is no elbow room to increase them further,” he added. For retail term deposits maturing between seven days to 45 days, SBI has raised the interest rates by 50 bps to 3.5 % from 3% while on deposits of 46 days to 179 days maturity, the interest rate has been increased by 25 bps to 4.75% from 4.5%. For deposits maturing between 180 days to 210 days, the new rate offered is 5.75% as against 5.25% earlier. The revised rate for deposits maturing between 211 days to less than one year is 6% compared to the existing 5.75%. The interest rate on term deposits maturing between three years to less than five years has been revised up by 25 bps to 6.75% from 6.5%. The bank has also increased interest rates on domestic bulk deposits (Rupees 2 crore and above) by up to 50 bps. Axis Bank is now offering FD rates of 3.50-7.10% to the general public on term deposits maturing in seven days to ten years. Banks offer 50 bps more to senior citizen on fixed deposits. The move to hike deposit rates comes amid tight liquidity in the system which has prompted banks to mobilise funds from money market. The liquidity deficit widened to an 8-year-high of Rupees 2.58 trillion last week on account outflows towards advance tax payments and goods and service taxes. Banks are mobilising funds to meet their credit growth which has outpaced deposit growth. Credit offtake continued to grow, increasing by 20.8% year-on-year (y-o-y) to reach Rupees 156.2 trillion for the fortnight ending December 1 while deposits rose at 13.4% y-o-y for the fortnight to reach Rupees 198.8 trillion as of December 1, 2023. The RBI has raised the repo rate by 250 bps since May last year while the weighted average domestic term deposit rates (WADTDRs) on fresh deposits and outstanding deposits rose by 228 bps and 172 bps, respectively, between May 2022 and October 2023.
Retail inflation in milk was reported at 8.85% in May 2023. The milk inflation has remained elevated at over 6% since August 2022. Despite India being the largest milk producer since 1998, the commodity has been the second biggest factor after cereals such as rice and wheat in driving up retail inflation in the last fiscal.
Milk has the second highest weight in the food and beverages basket of the consumer price index at 6.61%, a notch lower than cereals and products with a 9.67% weight. Organised players, including Mother Dairy and Amul, hiked prices multiple times in the last one year citing higher fodder cost, robust demand and some impact due to reports of lumpy skin disease.
Industry sources said feed cost, which has a share of more than 65% in the cost of production of milk, has increased to Rs 20/kg from Rs 8 a year ago. The finance ministry in April had attributed the elevated milk inflation to a demand supply mismatch and said it could be one of the factors apart from volatile international crude oil prices and constrained supplies of milk would influence the country’s inflation trajectory.
“Milk production has been impacted by a lumpy skin disease infecting millions of cattle in late 2022,” the ministry said in the monthly economic review, adding that the vaccination drive against the disease is expected to curb the spread and immune the cattle against the skin disease.
According to official data, currently India is the world’s largest milk producer, and has a share of 23% in global milk production. For the first time in decades, the country’s milk production is likely to have stagnated in 2022-23 due to Lumpy Skin Disease in cattle across several states and the lagged effect of Covid-19 in the form of stunting of the animals, a senior official with department of animal husbandry and dairying recently had stated. The milk production was estimated at 221 million tonne in 2021-22.