Yes Bank first to hike rates after RBI move

Mumbai  :  Yes Bank, the country’s fourth largest private sector lender, Wednesday hiked lending and deposit rates, a day after the Reserve Bank of India (RBI) kept key policy rates unchanged and cut growth forecast.

Yes Bank has become the first lender to hike rates. Others may follow as the RBI move has tightened liquidity in the markets.

Yes Bank said it will hike its deposit rates by 0.25 percent to 0.5 percent in select tenors effective from Aug 1.

“This provides an opportunity for retail depositors to lock in higher rates on term deposits,??? the bank said in a statement.

The bank has also decided to hike its base rate by a quarter percent to 10.75 percent effective from Thursday. This will make lending by the bank costlier.

In the first quarter review of the monetary policy announced Wednesday, the RBI had left all key policy rates unchanged to support the Rupee to stay stable.

The repurchase, or the repo rate, the interest that commercial banks pay to the RBI on short-term borrowings, has been left unchanged at 7.25 percent, and so has the reverse repo rate at 6.25 percent.

The cash reserve ratio (CRR), or the share of deposits banks must keep with the central bank, is also maintained at 4 percent.

Earlier this month, the central bank had taken a number of measures to squeeze liquidity out of the banking system, in order to ensure stability in the currency markets.