Corporation Bank, HDFC Bank, TimesBank and ANZ Grindlays have hiked their deposit rates by 50-100 basis points over the last few weeks. What is more interesting is that the rate hike is more at the long-end rather than the short-end of maturities.

For example, Corporation Bank has recently increased its term deposit rates for 180 days to 3 years by as much as 100 basis points. For fixed-income investors, this is a good opportunity to park their funds for higher returns.

HDFC Bank and TimesBank, which increased their term-deposit rates last month, are offering 11 per cent for 180 days to 1 year. TimesBank also offers 12 per cent for 2-5 years. On its long-term deposits, Corporation Bank has hiked its term-deposit rates by 100 basis points.

The bank now offers 11 per cent for 1-2 years and 12 per cent forover 3 years. ANZ Grindlays is offering 11 per cent for deposits over five years, which if compounded will give an yield of over 14 per cent.

Many analysts say this is the beginning of a reversal in interest rate movement. According to them, the rising inflation coupled with Reserve Bank of India's diktat on restricting money-supply growth to 15.5 per cent will lead to a scarcity of lendable resources and, thus, put pressure on interest rates.

Plus, the government's huge borrowing programme of Rs 87,034 crore and the increased cost of foreign currency borrowings in the wake of Moody's downgrade are also cited as reasons for bottoming out of interest rates.

However, interest rates are unlikely to go up unless credit offtake improves. In the current financial year, while banks' aggregate deposits have surged by 3 per cent, credit offtake has shown a negative growth of 1.6 per cent.

With banks flush with money, interest rates are unlikely to move up. The recent devolvement at the government of Indiaauction, which is often cited as an example of tightening interest rates, had more to do with the volatile forex market than paucity of funds in the domestic market.