Bank of Maharashtra has increased its fixed deposit rates by up to 125 basis points, or 1.25%, ahead of the festive season.

Some other banks are expected to up the deposit rates as they expect a higher demand for loans.  Earlier, Bank of Baroda raised interest rates on domestic retail term deposits up to 50 basis points across various tenors up to three years with effect from 9 October.

Bank of Maharashtra said Wednesday that the new rates are effective from 12 October. 

The rate increase applies to fixed deposits as well as special schemes as per period maintained by the bank, it said.

The hike in deposit rates will encourage individuals and business to save more as there is a sharp increase of 125 bps in deposit rates for the tenure of 46-90 days, it said.

For tenure of 1-year interest would be 6.50% and for deposits above one year, customers will enjoy an increase of 25 bps, up to 6.25%, it said.

The senior citizens shall enjoy an additional benefit of 50 bps in interest rate with an attractive deposit rate of up to 7.5% under 200/400 days' special scheme, as per the statement.