In the last few months, FD interest rates are being increased continuously by the banks. For this reason, the interest received on investment in FD has increased from 6 percent to around 8 percent during the Corona period and it is expected to increase further in the future.
Most people are considering only the Repo Rate as the reason for the rising interest rate in bank FDs, but this is not entirely correct. There are many other reasons behind the increase in interest in FD, which we will know about in this report.
Repo Rate
RBI started increasing the repo rate in mid-2022 to control inflation. There has been an increase of 0.40 percent in May 2022, 0.50 percent in June 2022, 0.50 percent in August 2022, 0.50 percent in September 2022, 0.35 percent in December 2022, and 0.25 percent in February 2023. Due to this, the repo rate, which was 4 percent in May 2022, has increased by 2.50 percent to 6.50 percent by February 2023.
Difference Between Credit Growth and Deposit Growth
According to the data released by the RBI on December 2, 2022, the credit growth of banks in the country was 17.45 percent on an annual basis, while the deposit growth was 9.85 percent. In this way, the difference between credit growth and deposit growth was 7.6 percent. At the same time, in December 2021, the deposit growth in the country was 10.28 percent, while the credit growth was 9.16 percent. In such a situation, banks are currently increasing interest rates rapidly to reduce the difference between credit growth and deposit growth.
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Bond Yields
Indian banks invest a part of their deposits in bonds. The period last July and December was very good for the bond market and from here banks have started increasing FD interest rates.
FD interest rates in major banks
The country’s largest government bank State Bank of India (State Bank of India FD Rates) is giving a maximum interest of 7.10 percent to general investors and 7.60 percent to senior citizens.
In HDFC Bank, a maximum interest of 7.10 percent is given to general investors and 7.75 percent to senior citizens.
In the Bank of Baroda, a maximum of 7.05 percent interest is being given to general investors and 7.55 percent to senior citizens.
In Canara Bank, a maximum of 7.15 percent interest is being given to general investors and 7.65 percent to senior citizens.
