Bank of Baroda has boosted deposit rates for clients through a special monsoon scheme, giving 7.25% on 399-day deposits and 7.15% on 333-day deposits. Senior people will receive an extra interest rate of 0.50%, resulting in 7.75% for 399 days and 7.65% for 333 days.

Earlier last month, ICICI and Axis Bank raised their fixed deposit rates. ICICI Bank offers 3% to 7.2% for ordinary clients and 3.5% to 7.75% for elderly folks. Currently, most public-sector banks give 6.1-6.8% for deposits of 1-2 years. Bank of Baroda offers the greatest returns across tenures.

While experts expect the RBI to decrease interest rates next, the difference between deposits and advances growth has resulted in continued competition for deposits.

With no reduction in the cost of capital, banks have adjusted some of their lending rates. SBI, the country's largest lender, increased its marginal cost of lending rate - a benchmark for certain of its commercial loans - by 5-10 basis points across buckets. Last week, Bank of Baroda upped its MCLR by 5 basis points throughout its tenure.

According to RBI data, deposits increased by 10.6% year on year as of June 30, 2024, while advances increased by 13.9%.