The FD rate could rise again in April, according to the new guidance from RBI.To increase the deposit base, the Reserve Bank of India (RBI) said in its monthly bulletin on Tuesday that banks can raise interest rates again. There is also an increase in competition between banks to charge interest rates.
The Reserve Bank of India (RBI) released its monthly bulletin on Tuesday saying that banks are allowed to raise interest rates again to increase deposits. In addition, increased competition between banks has led to an increase in interest rates. Banks have been battling for rate hikes since the central bank RBI raised its repo rate by 250 basis points (bps) in May 2022.
Interest rates may rise again in April
Analysts believe that despite low inflation in the US banking system, RBI could raise the repo rate by 25 basis points, or 0.25 percent. The repo rate is likely to remain at 6.75% in the coming month. An increase of 0.25 percent can lead to an increase of 2.75 percent.
Investments in FD increased
According to an RBI bulletin, FD returns have improved. As a result, banks have been able to increase their deposits. On an annual basis, there is an increase of 13.2 percent in the amount deposited in FD. Current and savings accounts both grew by 4.6 percent and 7.3 percent respectively. However, it was also said that the cost has also increased due to the rise in inflation.
This is now the average interest rate
In response to the RBI’s six consecutive repo rate hikes, banks have raised interest rates on all investments, such as savings accounts. The interest rates offered by small financial banks are more attractive than the interest rates offered by public sector banks. According to data from BankBazaar, the top 10 banks offer 7.5% interest on FDIs maturing in three years.
