Relief for those making FD, interest rates may increase, this is the reason

Investment Tips: FD is also one of the many investment options. People can invest only lump sum amount through FD. However, now an important information regarding FD has come to light. Let us know about it…

  • Investment: When it comes to safe investment, it also includes fixed deposits (FD). Through FD, people can deposit a lump sum amount in the bank or post office and then people also get fixed interest on that amount for a fixed period. However, the interest received on FD is much less as compared to other investment options, due to which it does not attract most of the people. Now there is a possibility that the interest rate on FD may be increased. Let us know the reason behind this…
  • During the first five months of the current financial year, the increase in bank loans has outpaced the growth in FD deposits. If the interest rate on FD is increased then it is expected that deposits in the bank will increase. The weighted average FD rates of banks have increased by 27 basis points in April-August 2023.
  • According to RBI data, bank deposits increased by 6.6% to Rs 149.2 lakh crore by April-August 2023. During the same period, growth in bank loans increased by 9.1% to Rs 124.5 lakh crore. The figures factor in HDFC’s merger with HDFC Bank, which widened the credit-deposit gap as the housing finance company’s deposits were less than its loans.
  • Overall, banks have added deposits of Rs 11.9 lakh crore, while their loan books have increased by Rs 12.4 lakh crore. The gap between credit and deposit growth has been managed due to surplus investment by banks in government securities.
  • According to CareEdge Ratings, credit growth for the current financial year is expected to be 13-13.5% excluding the impact of HDFC merger. The rating agency said banks will strengthen branch networks to ensure that deposit growth does not hinder loan offtake.
  • The difference between loan and deposit growth is reflected in liquidity in the money markets. At the same time, the weighted average term deposit rate of banks has increased from 6.28% in April to 6.55% in July 2023.
  • According to economists, one of the important determinants of deposit rates in the future will be liquidity leakage due to cash withdrawals. There are fears that the increase in deposits in current and savings accounts due to the withdrawal of Rs 2,000 bank notes is temporary. In the short term, liquidity is expected to come under pressure in mid-September due to advance tax outflows, which will exceed the incremental cash reserve ratio requirement by Rs 25,000 crore issued by the RBI.

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