RBI: Despite the drop in inflation numbers midway through the year, the RBI maintained the policy rate, resulting in fixed deposit interest rates remaining high. This strategy implemented by the RBI has proven to be successful. Because of improved interest rates, the percentage of fixed deposits in total bank deposits has risen to more than 61 percent from the previous year.
The MPC of the RBI has maintained a steady repo rate of 6.50 percent since February 2023. Although high repo rates result in higher interest rates on home loans and retail loans offered by banks, they also prompt banks to raise the rates on fixed deposit schemes in order to encourage more deposits, thereby curbing spending and promoting savings when inflation is high.
Fixed deposits are the preferred choice for the general public
Allow us to inform you about the type of data that was revealed in the latest report issued by the RBI. As per information from the Reserve Bank of India (RBI), fixed deposits are the preferred choice for the general public. Fixed deposits with high interest rates have seen a higher growth rate compared to current and savings accounts. The percentage of total deposits it holds increased to 61.4 percent this September, compared to 59.8 percent last year.
Significant number of deposits have been shifted to fixed deposits.
The RBI has published the BSR on Deposits with Scheduled Banks for the quarter ending September 2024. The report indicates that due to a strict monetary policy, a significant number of deposits have been shifted to high-yield fixed deposits. Fixed deposits earning interest rates higher than 7 percent have risen to 68.8 percent, compared to 54.7 percent from a year ago.