Will the rush for fixed deposits be short-lived?
Fixed deposits will continue to be relevant for investors even when interest rates fall
Are you from the generation that first consumed news on All India Radio and once collected audio cassettes of your favourite music? If yes, there is also a high chance that over the last 5-7 years, you learned that fixed deposits (FDs) don’t beat inflation and destroy wealth, courtesy of personal finance commentary across various multimedia mediums. The subsequent generations believe the notion more firmly. This popular narrative has influenced many to ditch FDs altogether in favour of equity and other asset classes. Even then, FD continues to be among the favourite savings instruments. Data from the Reserve Bank of India (RBI) shows that about ₹10.27 trillion was locked in bank deposits in fiscal year 2023. To put this number in perspective, only about ₹1.8 trillion household savings went into mutual funds through systematic investment plans (SIPs) in the same year.