Lower interest on savings accounts, higher on fixed deposits

 

State Bank Savings Account interest rate reduced by 5 basis points to 2.70%.  This rate will be applicable if keeping less than 10 crore rupees.  But in case of 10 crores or more in the account, the interest will be at the rate of 3%.  In both cases the rate was 2.75%.

• What's the story?  

Interest rates on some small savings schemes rose at the beginning of the month after the Reserve Bank hiked interest rates on lending policy at the end of last month.  As a result, it was expected that this time banks may also increase interest on fixed deposits (FDs). But at the same time, the State Bank reduced the interest rate on savings accounts on Monday.  At the same time they increased the interest rate on loans.  Besides the government bank, Kotak Mahindra Bank and Federal Bank have also hiked interest on loans.  Bank of Baroda is increasing interest on foreign currency deposits. 

According to the State Bank website, interest on deposits has also been hiked from October 15.  Interest rate increased by up to 20 basis points for tenors from 7-45 days to 5 years or more (up to 10 years).  The new interest rate is 3%-5.85% for deposits of less than Rs 2 crore for various tenures.  Senior citizens will get extra interest.

• What is next?

In this regard, the Center is emphasizing on attracting foreign currency to India.  In this situation, the Bank of Baroda increased the interest rate up to 135 basis points on foreign currency deposits of non-resident Indians for various tenures.  They said that this rate will continue till November 15.  This interest will be charged on new deposits and renewal of old accounts.