Home / Money / Personal Finance /  Banks hike FD rates. Good time to invest in fixed deposits?

After three consecutive repo rate hikes by the Reserve Bank of India (RBI), several banks have raised interest rates on fixed deposits (FDs). HDFC Bank, ICICI Bank, IndusInd, IDBI Bank are among those lenders that have hiked interest on term deposits recently. Smaller and new private banks are also offering lucrative rates to general public as well as senior citizens. In August, the central bank increased repo rates by 50 basis points to 5.4 percent.

So, amid the rising FD rates, is it good time to invest in fixed deposit (FD). What are the market experts saying?

One of the most difficult part of investing is determining start and end of cycles. Be it market cycle or the interest rate cycle, one can only get it right on hind sight on a consistent basis, said Vijay Singhania, Chairman, TradeSmart

Investors may be holding back on their investment in fixed deposits assuming interest rates will be hiked further. They may be right in their call but given the fluid situation one may never know. If not the entire amount one can start investing in part at the current rates. This way even if they do not get they top they will be close to the peak,  he added

Amit Gupta, MD, SAG Infotech said for senior citizens, new and smaller private banks are now offering rates as high as 7.5 per cent on three-year FDs. A portion of senior citizens' savings should be invested in FDs that provide liquidity and interest income. If other income is negligible, the savings can be used as part of an emergency fund. Although bank FD interest is taxable, most seniors have low tax slabs, so their tax liability is minimal or not present at all.

“USDINR continues to depreciate as India's import cover as a percentage of FX reserves has shrunk to about 10 months while the trade deficit is expected to be large. While we have seen the worst of inflation in India, RBI is likely to continue to front-load its rate hikes to prevent an interest rate differential widening. The RBI has been quite active in the spot market in order to prevent USDINR from breaching the psychological threshold of 80," said Amit Gupta.

FD interest rate calculator

The interest you can earn on your deposited amount depends on multiple factors, including the amount invested, tenure, rate of interest, interest computation frequency, and taxation. You can calculate the returns on your investment by using an FD calculator. 

SBI FD rates

2.90% to 5.65% (For general) 

3.40% to 6.45% (For senior citizens)

HDFC Bank FD rates

2.75% to 6.10% (For general)

 3.25% to 6.60% (For senior citizens)

ICICI Bank FD rates

2.75% to 6.10% (For general)

3.25% to 6.60% (For senior citizens)

IDBI Bank FD rates

2.70% to 5.75% (For general)

 3.20% to 6.50% (For senior citizens)

Kotak Mahindra Bank FD rates

2.50% to 5.90% (For general)

3.00% to 6.40% (For senior citizens)



Sangeeta Ojha

Sangeeta is a Chief Content Producer at Livemint. Writes on personal finance, banking and real estate. She has over 12 years of experience as a journalist with television and digital media
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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