Mumbai, Feb. 9: The battle for bank deposits has sent interest rates surging to a new high.

Saraswat Bank, the country’s largest cooperative bank, today offered to pay 10 per cent on a 15-month deposit.

This is the first time in five years that a bank is offering a double-digit interest rate on deposits. At present, none of the commercial banks offer double-digit interest rates on their deposits. The maximum that they offer across tenures stands at 9.5 per cent.

ICICI Bank, for instance, offers an interest rate of 9.5 per cent on fixed deposits for a five-year tenor.

Saraswat Bank, the Maharashtra-based bank, said the revised rates were for a minimum deposit of Rs 10,000 and they are valid up to March 23. The bank offers 4 per cent for deposits between 15 and 45 days, 4.25 per cent for 46 and 180 days, 8 per cent for 12 months and 9 per cent for deposits above 15 months to 18 months.

Industry circles said commercial banks are unlikely to follow suit and announce an aggressive rate structure. They, however, do not rule out the possibility of deposit rates inching up further in the days to come.

“The interest rates offered by co-operative banks have always been higher than other banks. Even if Saraswat Bank offers 10 per cent on deposits of 15 months, others will not do the same. When it comes to deposit rates, the conditions differ from bank to bank. Cooperative banks work on a different business model and in the case of other commercial banks, deposit rates are a function of their need for liquidity and cost of funds,” a senior official from one of the leading private banks said.

It is felt that though large commercial banks will not have to drastically increase their interest rates as their cost of funds is low vis-à-vis the smaller banks, the latter may have to increase their rates to remain competitive in the market.

Over the past couple of months, leading banks have not only increased deposit rates but have also announced new schemes to woo the saver. Last month, State Bank of India (SBI) announced a new term deposit product that offered an interest rate of 9 per cent for a period of three years.

Other banks that have raised deposit rates include Punjab National Bank, Canara Bank and Centurion Bank of Punjab.

The country’s largest bank also hiked interest rates on domestic term deposits — the second time in less than a month. More recently, ICICI Bank announced a steep increase on five-year deposits of 1.25 per cent to 9.50 per cent.