Private sector lender, Kotak Mahindra Bank has raised term deposit rates by 0.25%. With this the bank has become the first one to hike rates following the recent policy rate hike by RBI.

"It (deposit rate hike) was partly due to the RBI's policy and partly because of the upward pressure on interest rates for some time which has to reflect in deposit rates," the bank's Group Head-Retail Banking, K V S Manian said.

The bank said that the rise in deposit rates is applicable for all deposits having maturity of one year or more with immediate effect.

Lending rates too were poised to increase, he said, adding "as the cost of deposits go up, lending rates are bound to go up," Manian said.