The bank has become the first public sector bank to launch such an innovative scheme. Syndicate Bank said that the RBI fixed rate repo, which is at present fixed at 6 per cent, will serve as the benchmark and the deposit products will be priced at a spread ranging from 0.25 per cent to 1.50 per cent. In effect, the bank will offer between 6.25 per cent and 7.50 per cent interest rates on deposits. However, the release did not specify the maturity slabs. Industry sources said it could be only for the short-term deposits between 15 days and 180 days.

The bank, however, has not spelt out the benchmark in case the RBI resorts to the auction-based repo method replacing the present fixed reposystem. Banks normally offer fixed rate of interest on deposits and the depositors who have locked into such deposits at the lower end of interest rate cycle find it difficult to encash the benefits arising out of the rise in interest rates during the duration of the deposits.