Raghuram Rajan’s legacy for savers
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One of Reserve Bank of India (RBI) governor Raghuram Rajan’s objectives has been to provide decent positive real rates of interest for savers.
The chart shows real term deposit rates of banks (nominal term deposit rates for deposits over one year less consumer price inflation) since 2013.
Savers were facing negative real rates prior to Rajan taking over as governor at RBI. As a result, people put their savings in gold and non-financial assets such as land.
By January 2014, a few months after Rajan took over, real term deposit rates turned positive.
They then went up sharply as Rajan kept rates high, while inflation started to fall.
In recent months, though, the real term deposit rate has again started to fall, although it remains in positive territory.