Banks have also cut interest rates on fixed deposits (FDs) around the country, with high inflation and dropping interest rates. To deal with lowered interest rates, investors have been at their intellect end. In October, inflation relying on the Consumer Price Index (CPI) peaked at 7.61 per cent, the strongest since May 2014. If compared to the equity markets that close at record highs last week, most risk-averse investors prefer bank FDs since they deem them to be the safest choice, considering that returns are secured. After steady repo rate declines by the Reserve Bank of India (RBI), banks have lowered interest rates on fixed deposits across maturity periods.
There are still some banks that bid good interest on one-year FDs, despite dropping rates. Not unexpectedly, considering the rivalry they experience in reaping deposits, smaller private banks bid better rates up to 7 per cent. Contrasted to those provided by public sector banks, these interest rates are much higher. IndusInd Bank , for example, peaks the below table and promises 7% interest on one-year FD, led by RBL Bank and Yes Bank that bid 6.75% yield on one-year FD.
|Private Banks||Annual ROI in %|
|Public Sector Banks||Annual ROI in %|
|Punjab & Sind Bank||5.30|
|Bank of India||5.25|
|Punjab National Bank||5.20|
On one-year FDs, ICICI Bank and HDFC Bank promise 4.90 per cent interest. Axis Bank is promising interest at 5.15 percent. On its one-year FD, which is the lowest rate among private banks, Kotak Mahindra Bank is offering 4.60 per cent interest. On one-year FDs, public sector banks such as Punjab National Bank and Canara Bank bid 5.30 per cent interest. For their one-year FDs, commercial giants such as the State Bank of India (SBI) and Bank of Baroda (BOB) bid 4.90 per cent interest respectively. As we all know that the minimum and maximum investment threshold differ from bank to bank, but the cap ranges from Rs 100 to Rs 10,000 in case of private and public banks.
For data analysis, interest rates of all listed (BSE) private banks and international banks are assumed. There is little consideration for banks for whom provable specific is not available. Depending on the type of the term deposit account, the minimum investment amount may differ. Quarterly compounding is considered for all FDs and the Deposit Insurance and Credit Guarantee Corporation (DICGC), an affiliate of the RBI, assures investments in fixed deposits of up to Rs 5 lakh as well.