- Several banks including SBI, HDFC Bank have increased interest rates on fixed deposits.
- This is good news for FD investors who saw multi-year low interest rates as banks have been cutting interest rates over the past couple of years.
- There are expectations that the RBI would now start hiking interest rates due to high inflationary pressures.
Investment in fixed deposits (FD) at banks is still one of the popular investment products because of the guaranteed returns factor. Also, amid current volatile market conditions, FD is supposed to be one of the most secure and steady profit making products to invest in.
Since the last few years, interest rates on fixed deposits have been at a multi-year low considering the Reserve Bank of India (RBI) was busy picking up the economy from COVID-19 wounds. This required RBI to infuse liquidity in the system and thereby cut interest rates.
Cut to over two years since the pandemic happened, there is enough liquidity in the system and inflation is also high.
Moreover, Union Budget 2022-23 proposed larger capex to boost growth amid persistently high inflation. All this has led to expectations that RBI would raise interest rates in the country in the coming time.
Hence, several banks are hiking interest rates of fixed deposits after a gap of more than a year due to the pandemic.
Here are banks that revised interest rates of fixed deposits in recent days.
| Bank’s FD interest rates | 1 year to 2 years | 2 to 3 years | 3 to 5 years |
| HDFC Bank | 5% | 5.20% | 5.45% |
| SBI | 5.10% | 5.20% | 5.45% |
| UCO Bank | 5.10% | 5.10% | 5.30% |
| Central Bank of India | 5% | 5.10% | 5.10% |
Also, central banks of many developed countries are gearing up to raise interest rates to tame high interest rates, which have risen sharply across the world after the monetary policy stimulus programme since COVID-19.
In India, the RBI has kept rates steady for a long time as it thinks the economy needs some more support.
Nevertheless, this is good news for bank depositors as interest rates are expected to only inch up from here.
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