RBI revises repo rate to 6.5%: FD Rates to become more attractive
3 min read . Updated: 08 Feb 2023, 08:08 PM IST
PremiumFollowing the previous trends, this repo rate hike may make investments more profitable. It would then become a rejoicing period for customers intending to grow their money through FDs
Governor Shaktikanta Das announced-on February 8 that the Monetary Policy Committee (MPC) of the Reserve Bank of India had decided to raise the repo rate by 25 basis points to 6.5%. With this the RBI has hiked rates six times by a total of 250 points beginning May 2022.
Following the previous trends, this repo rate hike may make investments more profitable. It would then become a rejoicing period for customers intending to grow their money through FDs. This is because the repo rate serves as an external benchmark that financial institutions need to follow to set their maximum and minimum FD rates.
Key highlights:
- RBI hikes repo rate by 25 bps
- Maintains policy stance at withdrawal of accommodation
- MSF rate will stand revised at 6.75%.
- FY23 inflation projected at 6.5%
- CPI inflation moderated 105 bps in Nov-dec
- Real GDP growth FY24 seen 6.4%; Apr-Mar real GDP growth seen 7.8%
The RBI has also proposed to permit the lending and borrowing of G-secs (government securities). This would give investors a way to use their unused securities, improve portfolio returns, and encourage greater involvement.
Impact of repo rate on deposits
Every time the repo rate increases, a hike in interest rates on deposits usually follows. According to experts, customers with short- and medium-term assets, such as fixed deposits and savings, may profit from higher rates since they will get higher returns from their investments based on how banking institutions react to the most recent interest rate hike.
Fixed deposit serves as one of the safest and favourite investment options, especially for risk-averse individuals who intend to grow their capital at a decent and stable interest rate. Once invested, they do not need to stay bothered about ongoing market sentiments as the FD rates remain unruffled throughout the tenure. This is also a reason why individuals should ideally book FDs at a time when rates are higher.
Conforming with the hikes in the repo rate, Bajaj Finance, one of the leading financial institutions in India, is offering FD rates up to 8.10% per annum.
How can individuals book Bajaj Finance FD at higher rates?
Customers can book their FDs at Bajaj Finance at an interest within the range of 7.15% to 8.10% with deposits ranging between Rs.15,000 and Rs.5 crore. However, the investable amount does not influence FD rates. Rather, the below-mentioned four facets have a direct impact on this rate:
1. Maturity period: Individuals willing to keep their funds invested for a longer duration can ensure a higher FD rate. For example, customers can enjoy an interest rate of 7.60% with a tenure ranging between 36 and 38 months, but if their time horizon of investment is between 12-14 months, their FD rate will decrease to 7.15%.
2. Interest payout option: With Bajaj Finance, customers can choose the cumulative payout option, which lets them obtain the earned interest at the end of maturity. Alternatively, they can also go with the non-cumulative payout option to get the earned interest monthly, quarterly, half-yearly, or annually. However, the FDs with cumulative payout give a higher interest rate compared to the alternative option.
3. Investment profile: For the same tenure and interest payout frequency, senior citizen customers fetch higher interest rates than regular customers.
4. Special tenure: Bajaj Finance also lets customers secure a higher interest rate by booking their FDs for the given 7 special tenures. These are 15, 18, 22, 30, 33, 39, and 44 months.
Following is a table illustrating how investment profiles and special tenures can help customers earn a higher interest:
Note: The result has been generated using the Bajaj Finance FD Calculator.
Now that the repo rate is touching a phenomenal height, it can be one of the most profitable times to grow money safely through FDs with Bajaj Finance. The financial institution is accredited with [ICRA]AAA(Stable) and CRISIL AAA/STABLE, ensuring customers that their investment will stay secure.
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