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Wednesday, October 27, 2021

Will this decision of RBI increase the returns on FDs? Know which bank is getting more interest now

RBI has decided to revise the CRR to 4 per cent in two phases.

Generally, most people prefer fixed deposits for safe investment of their capital. Since this scheme is not market linked, it does not affect the fluctuations of the market. Today, a decision of the Central Bank Reserve Bank of India (RBI) on February 5 can have a huge impact on FD investors. RBI has decided that it will increase the CRR (Cash Reserve Ratio) to 4% in a phased manner. This is the ratio that the bank keeps in cash with central banks as a minimum share of deposits. There is no change in the CRR yet, but if it will be increased in March, the effect on FDs may increase. Return on investment in FD can increase.

CRR will be increased in two phases

RBI has decided to revise the CRR to 4 per cent in two phases. Earlier in the year 2020, due to the corona epidemic, it was reduced by 100 bps (1 per cent) to 3 per cent so that banks would have more cash and provide more loans. Now the RBI has decided that the CRR will be 3.5 percent from 27 March 2021 and 4 percent from 22 May 2021.

Possible to change FDS rates from CRR

Under the RBI regulations, all public and private banks have to keep a portion of their capital in cash form with central banks. This part is called CRR. This is more, banks have less cash, due to which they have less money available to give loans. To raise more funds for the loan, the bank makes FD attractive so that people are attracted to invest in it and to ensure the availability of cash with the bank. However, more interest may have to be paid on taking a loan, that means taking a loan from the bank can be expensive.

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Currently getting so much returns on FDs

If you invest five lakh rupees in a 5-year FD in big banks, you will get so much return.

State Bank of India (SBI)
FD amount: 5 lakhs
FD duration: 5 years
Rate of interest: 5.40 percent
Amount received at maturity: Rs 6,54,585
Interest earned: Rs 1,54,585

Punjab National Bank (PNB)
FD amount: 5 lakhs
FD duration: 5 years
Rate of interest: 5.30 percent
Amount received at maturity: Rs 6,51,335
Interest earned: Rs 1,51,335

HDFC Bank
FD amount: 5 lakhs
FD duration: 5 years
Rate of interest: 5.30 percent
Amount received at maturity: Rs 6,51,335
Interest earned: Rs 1,51,335

ICICI Bank
FD amount: 5 lakhs
FD duration: 5 years
Rate of interest: 5.35 percent
Amount received at maturity: Rs 6,52,958
Interest earned: Rs 1,52,958

Axis Bank
FD amount: 5 lakhs
FD duration: 5 years
Rate of interest: 5.50 percent
Amount received at maturity: Rs 6,57,851
Earned interest: Rs 1,57,851

Bank of Baroda (BOB)
FD amount: 5 lakhs
FD duration: 5 years
Rate of interest: 5.25 percent
Amount received at maturity: Rs 6,49,716
Earned interest: Rs 1,49,716

If you invest 5 lakh rupees in FDs with a tenure of 5 years in these banks, then compared to the amount received on maturity, the highest returns are available in Axis Bank. Bank of Baroda will get the lowest return on maturity in these 5 banks.

(The interest rates of these banks are on an annual basis and their information is taken from the banks’ website.)

Nisha Chawlahttps://www.businesskhabar.com/
She is an expert in Banking, Finance and working with an international bank. She sharing her ideas and knowledge with Business Khabar.
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