Central Bank of India hikes short-term rates

Fund crunch in the banking system is beginning to show clearly. Banks are announcing a steep increase in short-term deposit rates to attract funds from depositors.

Central Bank of India has just flagged off a sharp hike in very short-term rates (in different tenors of 7-90 days).

In the shortest time bucket of 7-14 days, the bank has lifted interest rates by 270 per cent from 2.5 per cent to 9 per cent.

In the next bucket of 15-45 days, rates are up 80 per cent. This has gone up from 5 per cent to 9 per cent. And in the 46-90 days bucket, rates are up from 5.25 per cent to 9 per cent.

These rates come into effect from March 12, a bank press release said.