Savings A/c, FD Rates To Further Go Down In Short-Term By 25-50 Bps

With liquidity infusion at the earlier stance and now again another shot of liquidity booster by the RBI to curb the fall-out of Covid 19 will put a downward pressure on interest rate on deposits.

Also, deposit mobilization is no longer needed to be incentivized by way of higher interest rate to depositors given the current financial system. So, both savings account and fixed deposit interest rate may still trend lower if the system continues to be adequately well-off.

So, accordingly there can be a revision in savings account and deposit rates by as much as 25-50 bps. 1 basis point is one-hundredth of a percentage point. And if this reduction if not immediate shall take some weeks time to come into effect.

One view hails, that the rate change in these instruments i.e. deposit account is effected with the change in repo rate which may happen in the next MPC meet.

So, while you may be concerned of falling interest rates, you ought to give prior consideration to safety of capital given the volatile times.

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