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HDFC Bank Ltd, India's top private lender, on Wednesday raised most of its retail fixed deposit rates by 40-75 basis points (bps), the latest among major banks taking the step to boost lagging deposit growth.

Growth in bank deposits has trailed lending growth sharply, causing concern for the central bank, as depositors choose to put money into shares and mutual funds for better returns amid high inflation.

Meanwhile, tightening liquidity and rising credit demand have led to a "deposit rate war" among lenders trying to attract more depositors.

State Bank of India, the country's largest lender by assets, on Tuesday raised deposit rates by 15-100 bps across tenors, while smaller private-sector peer Kotak Mahindra Bank raised fixed deposit rates up to 7%.

Macquarie Research has called slow deposit growth a "nagging worry" and sees banks' margins peaking in the third quarter as deposit growth runs well below loan growth and deposit rates inch up rapidly.

Deposit growth at Indian banks was at 9.6% year-on-year in the fortnight to Nov. 18, latest central bank data showed, while loan growth was at 17.2%.