The RBI MPC meeting, which is taking place between February 6-8, will announce its decision on the repo rate hike on Wednesday, February 8. It is expected that the RBI will go for a 25-basis-point hike in the repo rate, which might prompt banks to raise interest rates on deposits and loans. Here is the comparison of interest rates between bank FD and savings schemes.
Bank Fixed Deposits
Bank fixed deposits are time deposits wherein depositors keep their money for a fixed time, let’s say, 6 months, 1 year, 3 years or 5 years. The bank offers fixed annual interest rates on this fixed deposit, and the rates vary based on FD tenure and the depositor’s age.
Currently, HDFC Bank offers up to 7 per cent interest rates for the general public and up to 7.5 per cent rates for senior citizens (above 60 years of age). PNB offers up to 7.25 per cent for the general public and 7.75 per cent for senior citizens. ICICI Bank offers up to 7 per cent to the general public and 7.5 per cent to senior citizens.
Bandhan Bank on Monday, February 7, hiked interest rates on fixed deposits by 25-50 basis points based on the maturity period. The revised FD rates are applicable for retail deposits of up to Rs 2 crore, and are effective from February 6. Following the hike, the bank is offering FD interest rates of up to 8 per cent to the general public and 8.5 per cent to senior citizens.
Small Savings Schemes
These are savings instruments managed by the government to encourage citizens to save regularly. The small savings schemes have three categories — savings deposits, social security schemes and monthly income plan.
Saving deposits include 1-3-year time deposits and 5-year recurring deposits. These also include saving certificates such as National Saving Certificates (NSC) and Kisan Vikas Patra (KVP). Social security schemes include Public Provident Fund (PPF), Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The monthly income plan includes the Monthly Income Account.
Latest Interest Rates On Various Small Savings Schemes:
1-Year Post Office Time Deposits: 6.5 per cent
2-Year Post Office Time Deposits: 6.8 per cent
3-Year Post Office Time Deposits: 6.9 per cent
5-Year Post Office Time Deposits: 7.0 per cent
National Saving Certificates (NSC): 7.0 per cent
Kisan Vikas Patra: 7.2 per cent
Public Provident Fund: 7.1 per cent
Sukanya Samriddhi Account: 7.6 per cent
Senior Citizens Savings Scheme: 8.0 per cent
Monthly Income Account: 7.1 per cent.
The RBI in 2022 raised the repo rate five times by 225 basis points in total to 6.25 per cent, prompting banks to raise interest rates on deposits as well. In the last monetary policy review in December 2022, the RBI increased the repo rate by 35 basis points to 6.25 per cent, the fifth-time increase in a row. The repo rate is the interest rate at which the RBI lends to the commercial bank.
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