Increase in interest rate for deposit loans with increase in loan amount
Posted on: 04/Oct/2013 6:25:47 PM
Since the loan amount issued from the deposit, the bank is expected to increase the interest rate. From the deposit that the bank receives, say Rs. 100, must allot 23% goes towards bond, 4% reserve, whereas 73% can be given as a loan. But according to the Reserve Bank’s statistics, the banks are issuing about 78.52% as loan. This has decreased the deposit rates.
Therefore in order to attract more deposit from the account holders and borrowers have increased the deposit interest rate. This action is also expected to reduce inflation rate, as the Reserve Bank of India has increased the interest rate by 0.25% for certain loans.
