Mumbai: Amid talks of a possible cut in lending rates, Bank of Baroda (BoB) on Monday raised fixed deposit rates of select maturities by up to 0.25 percentage points.
   
BoB becomes the first bank to revise short-term fixed deposit rates, following the CRR reduction by RBI earlier this month.
    
Deposits worth less than Rs 1 crore with maturity period of 7-14 days will earn 5 percent interest as against 4.75 percent earlier, the bank said in a statement.
   
Similarly, interest rates on 15-45 days and 46-90 days fixed deposits have been raised by 0.25 percentage points to 5 percent, while those on 181-270 days term deposits have been increased from 7.60 percent to 7.75 percent effective on Monday.
   
Term deposit between 271 days to 1 year will earns 8 percent against 7.75 percent, it said.
   
Interest rates have been left unchanged for fixed deposits with duration beyond one year.
   
According to analysts, the short-term rate hike is mainly because of tight liquidity situation.
   
RBI reduced the cash reserve ratio (CRR)-- the portion of deposits banks require to keep with the central bank – from 5.5 percent to 4.75 percent. With the reduction, the central
bank pumped in Rs 48,000 crore in the economy.
   
Finance Minister Pranab Mukherjee said the government is expecting lower interest rates in the coming months as it looks at policy reversal by the Reserve Bank in the wake of moderation in inflation.
   
"... the fact that core inflation has moderated in the past three months and that in coming months we are looking at reversal in the policy rates should help in improving sentiments," Mukherjee had said yesterday.
   
RBI had raised the short-term lending (repo) rate 13 times between October 2010 and September 2011 in its bid to fight inflation. In all, the repo rate was increased by 3.75 percentage points.
   
The headline inflation remained high for most part of the year. It was only in December 2011 that it moderated to 8.3 percent, and then to 6.6 percent in January 2012, Mukherjee had said in the 2012-13 Budget speech.

(Agencies)