Bank FD Rates: Competition among banks to increase interest rates on FD, will get great returns on fixed deposits!
Bank FD Rates: Competition between banks is about to start to entice customers to make fixed deposits in banks. All the banks these days are offering attractive interest rates on FDs to the customers, which can help the banks to maintain the availability of cash to meet the increasing demand for loans. And in the coming days, banks can announce to increase the interest rates even more.
Banks skimped on increasing interest in FD
On May 4, 2022, the RBI started the process of increasing the repo rate, after which banks had to increase the repo rate by 2.25 per cent in five phases. Banks put their entire burden on the customers. Due to the increase in the demand for loans, the banks made the loans costlier. But the banks cleverly did not increase the deposit rates. The credit growth rate in the banking sector in 2022 has been 14.9 per cent, which means banks have given huge loans. But deposit growth in banks has increased only at the rate of 9.2 per cent. Whereas in 2021, the digit growth rate was 10.3 per cent, which was higher than the credit growth rate of 9.2.
Cash crunch in banks
Banks have also faced a cash crunch due to lower deposit growth as compared to credit in banks. For the first time after May 2019, in 2022, there was a cash crunch in the banks. The cash crunch has arisen due to an increase in loan demand, advance tax payments by corporates and banks not increasing deposit rates. But now to woo the depositors, banks have started increasing the deposit rates. In future also, banks will try to woo depositors by increasing interest rates on FD (Fixed Deposits), and RD (Recurring Deposits), so that banks will get cash.
Interest on deposits has to be increased
ICICI Bank, RBL Bank, Axis Bank and IDFC First Bank have decided to increase interest rates on deposits. From Monday, ICICI Bank has decided to increase the interest rates on deposits from Rs 2 crore to Rs 5 crore. The bank is paying 7.15 per cent interest on FDs with a tenure of 15 to 18 months. And 7.15 per cent interest will also be available on FDs for a period of 18 months to 2 years. RBL Bank has decided to increase the interest rates on FDs of less than Rs 2 crore. The bank is paying 7.55 per cent interest on FDs with tenures of 453 to 459 days, 460 to 760 days and 725 days.