Home loan provider HDFC Ltd triggered a rate war on Thursday by quietly offering its existing customers a 9.05% fixed deposit (FD) interest rate - higher than the rates offered by other financial institutions.
What the quiet move means for you is a higher interest income on your savings parked with HDFC in 22 or 33-month long-term fixed deposits.
To keep pace with market trends, other financial institutions may have to follow suit soon.
HDFC wrote in a mail to its customers: "We are pleased to make an exclusive offer of an additional 0.25 per cent on the prevailing interest rates on HDFC Platinum Deposit Plan".
Keki Mistry, vice-chairman and managing director of HDFC, told HT this was "one of our sources to raise funds", but refused to explain further.
Only two public sector banks, the State Bank of India and Punjab National Bank, are anywhere close to offering the rates for FDs that HDFC has. They offer up to 8% and 8.25% for two-year and three-year term deposits, respectively.
Private sector ICICI Bank offers 7.25 to 7.75% for the same tenures. Other banks offer the same or less.