New Delhi: Fixed deposit (FDs), also known as term deposits, are considered one of the most secure investment instruments in India. FDs are offered by private as well as public sector banks, small finance banks, non-banking financial companies (NBFCs) and post offices. The funds in these accounts have a lock-in period also have a specified date of maturity.
FDs are popular among Indians because they offer guaranteed returns. The interest rates on FDs vary depending on the tenor of the fixed deposit. In the past few days, several public and private sector banks have hiked their Fixed deposit interest rate. Here is a comparison between the fixed deposit interest rate on 1-year FD offered by top banks.
Interest rate offered by top banks on 1-year Fixed Deposits:
According to an earlier report fixed deposit interest rate, which has been on an upward trend since last one year, may rise further as banks require more funds for lending. This is a good news for retired people and savers as their interest income and return will rise. Analysts believe that in order to meet the additional demand for loan, banks have to raise their deposit. In order to raise more deposits, banks have to offer higher interest rates.
Worth mentioning here is that the gap between deposit growth and credit growth is widening, which further points to higher interest rates in the coming days. According to RBI data, loan growth in the economy currently stands at 15 per cent while deposits are growing only at 9 per cent, this shows that banks are also depending on borrowed funds to meet their credit demand.