Four banks announced increases in short-term deposit rates after the central bank last week announced a package of measures to support the rupee after it reached a record low of 43.70 per dollar.

The Reserve Bank of India (RBI) announced a 100 basis point hike in banks' cash reserve ratio (CRR) to 11 per cent and increased its repo rate to eight per cent from five per cent as part of the package announced last Thursday.

Analysts' estimates of the amount of funds getting locked up in cash balances with the central bank because of the CRR hike ranged from Rs 50 billion to Rs 63 billion.

"We have hiked some short-term deposit interest rates with effect from August 21," said S Anand, treasury head at private sector IDBI Bank.

"The RBI measures announced last week signal a hike in short-term interest rates so we have reacted to this," he said.

The central bank's measures combined with market intervention helped the rupee recover from its record low and in afternoon trade on Tuesday, it was quoted at 42.48/50.

The deposit rate hikes have ranged from 100 basis points to 200 and been restricted to deposits with maturities up to a maximum of one year.

"The RBI has said the measures are temporary so we have hiked rates only for maturities up to 90 days," Anand said.

But most banks have not yet reacted to the central bank's measures, with only one state-run bank, the Bank of India (BOI) announcing a hike in deposit rates.

State-run banks account for more than two thirds of total deposits and advances of all banks in India.

"It is a bank-specific requirement," said a BOI official, when asked whether it was in response to the central bank's measures.

"We found that we were not getting deposits as we should, looking at the rate of growth of deposits of banks from the central bank data," the official said.

Bankers had told Reuters after the RBI announced the measures last week they did not expect an increase in interest rates as liquidity with the banking system was good.

"The banks which have raised rates may be having some temporary mismatch in asset-liability maturities," said a treasury head at a state-run bank.

"But there is no need for larger banks with well-developed retail network to hike their rates."

Analysts said good liquidity with banks also forestalled the need for a rise in interest rates.

Deposits with commercial banks grew by 4.5 per cent to Rs 6,323.75 billion till July 31 in the current financial year (April-March) but total flows from banks to the commercial sector fell by Rs 11.69 billion in the same period.

"The basic difference between now and January is that there is a cushion in the form of inflows from the Resurgent India Bonds," said Vasan Shridharan, treasury economist at Standard Chartered Bank in Mumbai.

The RBI adopted a similar currency defence package in January when the rupee had come under attack from a spillover of the Asian turmoil.

Several banks had then hiked deposit and lending rates.

The Resurgent India Bond issue -- launched by the State Bank of India (SBI) on August 5 -- had raised more than $4.0 billion when it closed on Monday, the arranger to the issue said.

While SBI will keep part of the proceeds abroad, the rest will be brought in and swapped into rupees and lend part of this to collecting banks.

"We are talking about liquidity inflows to a number of banks," said a money market dealer at a foreign bank. "So it is difficult to see rates going up across the board."