Mumbai: Public sector banks (PSBs) are raising fresh term deposit rates, even as private sector peers pare theirs, in a bid to arrest a decade-long erosion in their share of the deposit market, showed Reserve Bank of India (RBI) data.The weighted average fresh term deposit rate at public sector banks rose 15 basis points to 6.33% in May from 6.18% in April, bucking the broader trend as private sector banks cut their rates by 5 basis points to 5.96% during this period.A basis point is a hundredth of a percentage point.PSBs have steadily lost deposit market share over the past decade, with their share declining to 57% in March this year from 76% at the end of 2013-14. In contrast, private sector banks increased their share of system deposits to 36.4% from 19.4% during this period, as per RBI data."Public sector banks have realised that deposit market share is strategic. After losing ground for almost a decade, they are willing to pay up for liabilities rather than sacrifice franchise," said Prakash Agarwal, partner at consulting firm Gefion Capital. "The recent increase in deposit rates is a conscious effort to regain market share, even if it comes at the cost of near-term margins."The move comes at a time when credit growth continues to outpace deposit mobilisation. With the banking system's credit-deposit ratio remaining elevated at 82.5%, PSBs can ill afford to lose further ground in liabilities, making the current deposit rate strategy a competitive necessity. "On the deposit front, the outperformance gap between private sector banks and public sector banks continues to remain narrow," said Pranav Gundlapalle, head of India Financials at Bernstein. "The growth differential is around one percentage point, with PSBs reporting deposit growth of about 10% versus around 11% for private sector banks."