Union Finance Minister Nirmala Sitharaman recently hinted at the need to cut interest rates for the sake of growth. In a covert hint, which can be construed as a nudge, she hoped for the lending rates to be more affordable.
At an SBI event held in Mumbai on Monday, Ms Sitharaman said that the bank interest rates will have to be “far more affordable at a time when we want industries to ramp up and build capacities”. Her comments have again added to the chorus of calls for the cut in repo rate, which RBI has kept unchanged since Feb 2023.
Meanwhile, there is no official statement or even a hint from the Reserve Bank of India to indicate that there could be a rate cut in the next monetary policy committee (MPC) meeting scheduled in December 2024.
However, if the RBI’s six-member MPC decides to cut the repo rate next month, the lending rates would march downward. And so would be fixed deposit (FD) interest rates. In view of this, depositors are advised to lock their FDs at the prevailing high rates before they move downward.
Let us examine which banks are offering high rates of interest. For the sake of simplicity, we list out the interest rates offered on 3-year fixed deposits by the banks across public and private sectors.
State lenders
State Bank of India (SBI): The largest state bank offers 6.75 percent on three-year fixed deposits to regular citizens and 7.25 percent to senior citizens with effect from June 15, 2024.
Punjab National Bank: With effect from October 1, the second largest state lender has been offering 7 percent to regular citizens and 7.5 percent to senior citizens on a 3-year tenure.
Union Bank of India: The Union Bank of India offers 6.5 percent to regular and 7 percent to senior citizens on its three-year fixed deposits.
(Source: Bank websites; These are interest rates on 3-year-FDs)
Private banks
HDFC Bank: Starting July 24, 2024, this largest private bank has been offering 7 percent to regular citizens and 7.5 percent to senior citizens on 3-year FDs.
ICICI Bank: Just like its competitor in the private banking space, ICICI Bank has also been offering 7 percent to regular and 7.5 percent to senior citizens on three year fixed deposits.
Kotak Mahindra Bank: Since June 14 this year, this smaller private lender has been offering 7 percent and 7.6 percent to regular and senior citizens, respectively, on three-year fixed deposits.
Federal Bank: It offers 7 percent and 7.5 percent to regular and senior citizens, respectively, on its three-year fixed deposits with effect from October 16, 2024.
