Soon after State Bank of India (SBI) hiked deposit rates, Bank of Baroda announced an increase in interest rates on domestic retail term deposits by up to 125 basis points in various maturity buckets. 

The revised rates will come into effect from 29 December. 

The new rates will be applicable for domestic deposits below Rs 2 crore, including non-resident Indian ordinary (NRO), Bank of Baroda said in a statement.

The increase in rates is largely focused on shorter-term maturity buckets, specifically those less than one year. 

Increasing interest rates in shorter-term maturities will not only greatly benefit depositors who keep deposits for shorter maturities but will also contribute to the bank's objective of balancing and optimising the overall cost of deposits and protecting its net interest margin (NIM), the state-run lender said. 

This was also in line with the bank’s strategy to increase its share of shorter-term retail term deposits, it added.

Ravindra Singh Negi, chief general manager of retail liabilities & NRI business at Bank of Baroda, said, “We believe this step will not only attract more customers as they earn more on their savings but will also help the bank optimise its cost of deposits, thereby safeguarding our NIM.”

Earlier on 27 December, SBI hiked the deposit rates by up to 50 basis points.