- The RBI Monetary Policy Committee kept interest rates unchanged at 5.25% in its latest review
- Banks are unlikely to revise fixed deposit interest rates immediately following the RBI decision
- Current FD rates in India range from 6.60% to 8.10% depending on tenure and bank policies
The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) on Wednesday announced to keep the interest rates unchanged at 5.25%. The move, aligned largely with economists' expectations, comes amid hopes of global recovery following the two-week ceasefire deal between the US and Iran.
This marked the RBI's first monetary policy review after the government set a new inflation target last month. The central bank is now tasked with maintaining retail inflation at 4% (with ±2% margin) through March 2031. Announcing the first bi-monthly monetary policy for the current fiscal, Governor Sanjay Malhotra said that the MPC unanimously adopted a neutral stance.
While the lending rates set by the RBI are meant to balance broader economic targets, they also influence banking products such as loans and fixed deposits. Since the RBI has kept its repo rate unchanged in the latest review, here's how it may or not affect the FD rates of banks.
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Impact of RBI Rates On FDs
The RBI's decision to hold the repo rate signals stability for fixed deposit rates. Banks, which use the RBI's policy rate to set interest for loans and deposits, are unlikely to revise FD rates immediately. This means limited prospects for higher returns on new deposits.
To be clear, customers with existing FDs remain unaffected, as their return rates are already locked.
Current FD Rates
Banks and other financial institutions in India are offering different FD rates at present. These range from around 6.60% to 8.10%, depending on the tenure of the deposit, the bank's policy and other aspects, data from PaisaBaazar website shows.
Customers looking to open new term deposits can review the current FD rates and compare options across banks to maximise their returns.
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While FD rates may not appear very attractive, they come with the assurance of guaranteed returns. FDs also give customers flexibility over the lock-in period. This allows investors to diversify their portfolios and have protection against market volatility, making FDs a safe and reliable investment option.
Disclaimer: This is not investment advice, and is only meant for informational purposes.
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