It is party time once again for depositors looking for high rate of return from long term bank deposits. Interest rates have gone up very fast in the last few months for both deposits as well as lending rates. The largest bank in the country, State Bank of India increased the deposit rates ranging from 0.5% to 1.5% on 06-Dec-2010. With this hike, the maximum rate offered by SBI on its deposits has gone upto 8.75% on 8 to 10 years deposits. The bank is also offering 8.5% rate of interest for deposits upto 555 days. SBI is not the only bank which is offering this kind of attractive rate. The deposit rates have gone up very fast in the last six months as RBI has hiked its benchmark rates like repo and reverse repo rate.

The deposit rates being offered by some of the banks and financial institutions in India is as follows:

Name of the Bank | Period of deposit | Rate of Interest
ICICI Bank | 990 days | 8.25%
Oriental Bank of Commerce | 500 days | 8.25%
Corporation Bank | For period beyond 3 years | 8.20%
Saraswat Bank | 6-7 years | 8.50%
Yes Bank | 5 years and beyond | 8.00%
HDFC | 60-84 months | 8.35%

Source: website of the respective bank

The increase in the rates has made deposits look very attractive. Though these deposits do not provide any kind of tax benefits, they are very attractive from a long term prospective. Senior citizens are eligible for even higher rates.

The key question that many investors may have in their mind is whether the rates will go up even further in the days to come. Any further increase in the deposit rate looks remote possibility as the inflation in India has more or less stabilized. The consistent increase in the rate of interest has made its impact on corporate growth rate as well. Though there is a fear of fuel prices going up in wake of rise of crude oil price globally, however this may not cause rise in the interest rates immediately.

All the banks have revised deposit rates recently and hence won't be doing an immediate increase in next three to four months. Hence if you are looking for parking money for a longer period, it is better that you select one of these deposits depending upon your time horizon and park your money in these attractive deposits.

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