The Reserve Bank hiked bank's cash reserve ratio (CRR) to 11 per cent and repo rates to 8 per cent to suck out excess liquidity from the system, thereby preventing the spillover of domestic liquidity into the forex market.

Among the new private sector banks, IDBI Bank hiked the differential interest rates on short term deposits and other new generation banks are set to follow the suit next week. In contrast, public sector banks have preferred to wait and watch for the time being.

On 15-30 day deposits for over Rs 40 crore as well as those for Rs 20 crore and above, but less than Rs 40 crore, BankAm will now offer 14 per cent, up from the earlier 6.25 per cent; 13.5 per cent (6 per cent) for over Rs 10, but less than Rs 20 crore; 13 per cent (6 per cent) for over Rs 5 crore, but less than Rs 10 crore; 11 per cent (5.5 per cent) for over Rs 1 crore, but less than Rs 5 crore; and 11 per cent (5 per cent) for more than Rs 15 lakh, but less Rs 1 crore.

BankAm has also hiked interest rates by 350 to 650 basis points on deposits of maturity 31-60 days for similar amounts.

In the case of ABN Amro Bank, it will now offer 12 per cent (5.5 per cent) on 15-29 day deposits for less than Rs 1 crore and 13 per cent (5.5 per cent) for over Rs 1 crore; 11.5 per cent (8 per cent) for 32-59 day deposits for less than Rs 1 crore and 13 per cent (8 per cent) for more than Rs 1 crore.

Officials in other foreign banks like Standard Chartered Bank, Hong kong Bank and ANZ Grindlays are expected to take a decision on a short-term deposit rate hike early next week.

IDBI Bank has also hiked the differential interest rates on short-term high networth deposits over Rs 50 lakh and up to Rs 10 crore. The bank has hiked the rates on maturities of 15 days to 6 months by 50 basis points across the board.

"We have taken this step as a protective measure to avoid a flight of deposits when they mature," said IDBI Bank's managing director Deepak Mukherjee.

Other private banks said that they would prefer "to wait and watch the market before any revision in their rates is made".

Senior officials at ICICI Bank on Friday, but could not come to any conclusion on a rate hike. "We will make an announcement on revised interest rates early next week," said a senior official at the bank.

ICICI Bank, will, in all probability, announce an inverted yield curve, similar to the one it made after the January 16 market turmoil, when the Reserve Bank announced a set of measures to reign in the falling rupee.