FD and RD will get more interest, banks will increase deposit rates after increase in repo rate

Bank Deposit Rates Hike: RBI has announced to increase the repo rate for the sixth consecutive time. Due to this announcement of RBI, it is bound to make the loan costlier. But there is good news for those who are preparing to deposit their hard earned money in banks through fixed deposits or recurring deposits. In the coming days, banks may soon announce an increase in interest rates on deposits.

Announcing the monetary policy, the RBI has increased the repo rate by a quarter of a percentage point from 6.25 percent to 6.50 percent. When banks give repo rate based loan, it is always more than 2.25 percent from the repo rate. But the interest rate on deposits remains less or slightly higher than the repo rate. Now the repo rate has become 6.50 percent, so the deposits that banks will now take will get more than 6.50 percent interest rate. In such a situation, in the coming days, banks can decide to increase the interest rates on deposits.

Last month, banks like ICICI Bank, RBL Bank, Axis Bank and IDFC First Bank had announced to increase interest rates on deposits. Public sector banks have also increased deposit rates. ICICI Bank is giving 7.15% interest on some of its deposits, RBL Bank is also giving 7.55% interest bank on FD. Anyway, there is a competition among the banks to woo the depositors. So that the availability of cash can be fulfilled to meet the increasing demand for loans. On May 4, 2022, RBI started the process of increasing the repo rate, since then banks have continuously made loans expensive. But the banks did not increase the deposit rates at the same rate at which they made loans costlier. After which people are preferring to invest instead of mutual funds.

On the other hand, while presenting her fifth budget on February 1, 2023, Finance Minister Nirmala Sitharaman announced a special deposit scheme for women called Mahila Samman Saving Certificate. Under this scheme, the government is giving 7.5 percent interest per annum on deposits of only two years. The Finance Minister has doubled the investment limit for senior citizens from Rs 15 lakh to Rs 30 lakh, not only for women but also for senior citizens, which earns 8% interest. In such a situation, the challenge of wooing the depositors has increased in front of the banks. After which the pressure on the banks to increase the interest rates on deposits has increased.

read this also

RBI MPC Meeting: RBI will rein in banks on charging penalty charges for not making EMI payments, charges will be limited