Interest Rates on Fixed Deposits

Is this the beginning? – Major banks cut interest rates on fixed deposits

16 November, 2016

Since the demonetization action taken by the government, there has been speculation regarding the lowering of interest rates as a cascading effect of this action taken by the government. May be we are seeing early signs of this trend taking place as earlier this week the State Bank of India (SBI) announced a lowering of interest rates. The State Bank of India earlier this week announced a reduction of interest rates on bulk deposits by 15 basis points across one to three year tenors with immediate effect.

Read More on Demonetisation: SBI slashes bulk deposit rates by up to 1.9%

At the same time Axis Bank reduced its marginal cost of lending rate (MCLR), which is the weighted average cost of borrowing according to the bank’s data. This move is a result of the increased amount of money coming into the bank by way of deposits after the government announced the scrapping of Rs.500 and Rs. 1000 notes.

As a result of the demonetization scheme banks all across the country have seen a surge in daily deposits and as a result banks are expected to reduce interest rates in the near future.

The State Bank of India has announced interest rates for term deposits of a tenor of one year to 455 days, 456 days to two years and two to three years are now reduced to 6.90%, 6.95% and 6.85% respectively.

Other banks such as SBI, HDFC bank and ICICI Bank have reduced MCLR by 15 basis points in the past one-month, with Axis Bank reducing its MCLR by 15 basis points up to one year to 9.05%. MCLR for both two and three year tenors have accordingly been reduced by 20 basis points to 9.10% and 9.15% respectively. The reduced MCLR will take effect from Friday.

Read More on Bad news for FD investors: SBI, Kotak HDFC slash deposit rates

This development may be a direct result of the demonetization scheme of the government, which has resulted in an overnight surge in deposits with the banks. Is this trend to continue, we will have to wait and watch.

In this volatile climate, investors are not really sure of which way their returns from investments are going to go. Peer to peer lending can and does offer a more clear and transparent investment opportunity for investors who are looking for fixed, periodic returns from safe investing.

Monexo India’s premier peer-to-peer lending platform offers investors looking for a safe and solid investment option the chance to invest their money at their convenience as per their needs and preferences. When you invest as a lender with Monexo.co.in you become the master of your portfolio, just the way it should be as you avoid the vagaries of changing government policies and market situations.

low interest on fixed deposit investments bothering you

Related News on Fixed Deposit Rates Slashes
Economic Times: SBI cuts FD rates on select maturities by 0.15%
Livemint: Fixed deposit rates down. Should you lock in or look for alternatives?
Business Standard: Diversify beyond fixed deposits