RBI: Bank Fixed Deposit (FD) Interest Rates Increased

Current Context: Banks have been increasing deposit rates after the rate hikes by the RBI and a strong credit growth after the pandemic. The competition among banks to expand their deposits led the banks to increase fixed deposit rates.The Reserve Bank has increased the short-term lending rate by 225 basis points since May, 2022.

On year-on-year basis, term deposits are estimated at 13.2 per cent.
Current deposits are at 4.6 per cent and savings deposits are increased at 7.3 per cent.
The banks keep rearranging their deposit rates and have also revised their repo rate and benchmark prime lending rates by 250 bps in terms with the increases in the policy repo rate since May last year.
Banks have also increased their marginal cost lending rate (MCLR) by 135 bps during May 2022 to February 2023.
Consumer inflation in India is between 5% and 5.6% in the next financial year. However weather conditions impacting seasonal rains are a risk and harvesting of winter crop is also impacted by heat waves, untimely rains and hailstorms leading to an increase in food inflation.