Mumbai, Jan 04 (Agencies): Public sector lender IDBI Bank on Tuesday announced an increase in the interest rate on certain retail term deposit schemes by up to 75 basis points, in line with similar steps by its peers.

The interest rates were hiked for deposits of both less than Rs 15 lakh as well as those of between Rs 15 lakh and up to Rs 1 crore and will come into effect from Tuesday.

In an additional offering to woo customers in the current stage when interest rates are on an upswing, IDBI Bank has decided to do away with penalties on premature withdrawals of fixed deposits.

When asked about feasibility of the abolition of penalty, the bank's Executive Director Sushil Muhnot said this will be a "limited-period offer".

Fresh deposits and renewals made after January 1, 2011 will not be charged a withdrawal penalty, the bank said.

The rate hike announced is from immediate effect and with the revision, the highest interest on retail term deposits would be 9.25 per cent.

For deposits of up to Rs 15 lakh, the maximum hike is of 75 basis points.

The interest rate on deposits with a maturity period of 270 days and above, but less than one year, has been increased by 75 basis points to 8 per cent.

Furthermore, the rates for deposits with a tenor of between one year plus one day and 499 days have been hiked by 35 basis points to 8.50 per cent, it added.

For retail term deposits with a maturity period of 500 days, the bank has revised the interest rate to 9 per cent, up 50 basis points from the prevailing rate.

Another major hike will be effected on deposits with a tenor between 500 days and 1,099. The rate of interest on such retail term deposits has been increased by 75 basis points to 9 per cent, IDBI Bank said.

Besides, for deposits with a maturity of 1,100 days, the new rate will be 9.25 per cent, up 50 basis points.

For deposits of up to Rs 15 lakh with a duration of seven year to ten years, the rates have been revised upward by 25 basis points to 8.75 per cent.

The rate hike has been done in view of "credit demand, inflation and liquidity scenario", the bank said in a statement.

Other lenders such as Dena Bank, Kotak Mahindra Bank, State Bank of India and HDFC Bank among others have already hiked their retail term-deposit rates.

Similarly, deposits between Rs 15 lakh and Rs 1 crore have also been put under rate hike.

For deposits of between Rs 15 lakh and Rs 1 crore with a maturity period of 270 days and above, but less than one year, the interest has been increased by 75 basis points to 8 per
cent, the state-owned lender said.

The rates for deposits with a tenor of between one year plus one day and 499 days have been hiked by 35 basis points to 8.50 per cent.

For retail term deposits in the Rs 15 lakh to Rs 1 crore bracket with a maturity period of 500 days, the bank has revised the interest rate to 9 per cent, up 40 basis points, IDBI Bank said.

A hike of 50 basis points will be effected on deposits of Rs 15 lakh and up to Rs 1 crore with a tenor between 500 days and 1,099. The new rate such term deposits will be 9 per cent, IDBI Bank said.

For deposits with a maturity of 1,100 days, the new rate will be 9.25 per cent, up 50 basis points.

For deposits of Rs 15 to Rs 1 crore with a duration of seven year to 10 years, the rates have been increased by 25 basis points to 8.75 per cent.

The interest rates for all other maturities remain unchanged, the bank added.