Many commercial banks in Fuzhou city have raised their deposit interest rates, after the country's central bank announced a cut in its benchmark interest rate.

Effective from Nov 22, the People's Bank of China cut the one-year benchmark lending rate by 40 basis points to 5.6 percent and the one-year benchmark deposit rate by 25 bps to 2.75 percent. Other benchmark deposit and lending rates were lowered accordingly.

The PBOC also raised the deposit rate ceiling from 1.1 times the benchmark to 1.2 times.

Following the adjustments, banks, which in fact have more freedom in setting the deposit interest rate, have increased their deposit rates in a bid to grab more market share.

The Industrial Bank even elevated the deposit interest rate twice within a week. On Nov 22, it raised the interest rate of three-month, half-year and one-year deposits by 10 percent to 2.585%, 2.805% and 3.025%. And on Nov 27, it again increased the interest rate to 2.72%, 2.93% and 3.16%, respectively.

As of Nov 27, seven banks in Fuzhou have implemented the 1.2-times deposit rate ceiling on parts or all types of deposits. They are Fujian Haixia Bank, Rural Credit Cooperatives, Ping An Bank, Evergrowing Bank, Hua Xia Bank, Chouzhou Bank and China Everbright Bank.

Fujian Haixia Bank is the most enthusiastic to apply the 1.2-times interest ceiling to all deposit types. Now its interest rates for three-month, half-year, one-year, two-year and three-year deposits stand at 2.82%, 3.06%, 3.3%, 4.02% and 4.8%, respectively.