Some private banks raised deposit rates in order to attract more funds from public amidst Reserve Bank of India's (RBI) move to tighten liquidity in the banking system.

These banks include Karnataka Bank, ICICI Bank, among others. Recently, Karnataka Bank hiked deposit rates by 25-50 basis points across maturities.

The largest private sector lender in the country, ICICI Bank, hiked rates on retail deposits maturing in 46 days to 389 days by 50-75 basis points.

ICICI Bank, however, retained its base rate or minimum lending rate unchanged at 9.75 percent. The private lender currently offers maximum 9 percent on retail term deposits that mature in 390 days to two years.

Other private sector banks that raised deposit rates include HDFC Bank, Axis Bank and YES Bank. These banks hiked their term deposit rates by 25-225 basis points following the Reserve Bank of India's (RBI) first quarter review of monetary policy on July 30, 2013.

A few lenders like HDFC Bank and YES Bank have even increased their base rates by 20-25 basis points.

Bankers feel that market rates at the very short-end have risen. This would affect the cost of funds for those banks that depend on short-term and wholesale deposits largely.