Interest rates

SBI and HDFC Bank have raised interest rates on term deposits

  • Several banks, including SBI and HDFC Bank, have raised interest rates on term deposits.
  • This is good news for FD investors who have seen multi-year low interest rates as banks have cut interest rates over the past two years.
  • The RBI is now expected to start raising interest rates due to strong inflationary pressures.

Investing in fixed deposits (FD) with banks is still one of the popular investment products due to the guaranteed return factor. Moreover, in the current volatile market conditions, FD is believed to be one of the safest and most stable products to invest in.

For the past few years, term deposit interest rates have been at multi-year lows as the Reserve Bank of India (RBI) was busy recovering the economy from the wounds of COVID-19. This forced RBI to inject liquidity into the system and thus cut interest rates.

Reduced to more than two years since the pandemic happened, there is enough liquidity in the system and inflation is also high.

Moreover, the Union budget 2022-23 proposed higher capital expenditure to stimulate growth in a context of still high inflation. All of this has led to the expectation that RBI will raise interest rates in the country in the coming times.

Thus, several banks are raising interest rates on term deposits after a gap of more than a year due to the pandemic.

Here are the banks that have revised fixed deposit interest rates in recent days.

Bank FD interest rate 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%

In addition, central banks in many developed countries are gearing up to raise interest rates to rein in high interest rates, which have risen sharply around the world following the monetary policy stimulus program since COVID-19.

In India, the RBI has held rates steady for a long time as it believes the economy needs more support.

Still, this is good news for bank depositors, as interest rates are only expected to rise a little from here.

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