Banks Boost FD Interest Rates Amid Deposit Competition
Click to start listening
Synopsis
In a bid to attract more deposits, banks like SBI and IDBI are increasing fixed deposit interest rates. New schemes target super senior citizens and aim to boost savings among the public.
Key Takeaways
- Banks are competing fiercely for deposits.
- SBI and IDBI lead in raising FD interest rates.
- Special schemes for super senior citizens are introduced.
- Recurring deposit schemes encourage savings.
- Finance Minister emphasizes faster deposit growth.
Mumbai, Jan 14 (NationPress) Financial institutions have started to enhance the returns on fixed deposits due to intense competition for attracting more deposits. Major players like SBI and HDFC were among the first to increase interest rates, prompting smaller institutions such as IDBI to follow suit to remain competitive.
SBI has launched a new category for super senior citizens aged 80 and above, offering an additional 10 basis points compared to standard rates for senior citizens. This initiative has been adopted by IDBI Bank as well.
IDBI Bank has introduced the 'IDBI Chiranjeevi-Super Senior Citizen FD', a specialized fixed deposit product for individuals aged 80 and older. This scheme provides an additional 0.65 percent interest on top of regular fixed deposit rates. Interest rates include 8.05 percent for a 555-day tenure, 7.9 percent for 375 days, 8 percent for 444 days, and 7.85 percent for 700 days. This plan became effective on January 13, 2025.
In addition to this, SBI has rolled out a new savings initiative called ‘Har Ghar Lakhpati’ (Lakhpati in Every Home) recurring deposit scheme, aimed at allowing individuals to build a corpus of Rs one lakh or more through small monthly contributions over a period of three to ten years.
Individuals, including minors aged 10 and above, can open an account under this scheme.
For those under 60 years old, interest rates stand at 6.75 percent for tenures of three to four years, and 6.50 percent for periods of five to ten years. For individuals over 60, the rates are 7.25 percent for three and four years, and 7 percent for five to ten years.
Moreover, Bank of Baroda has launched liquid fixed deposits, allowing customers to withdraw in increments of Rs 1,000 after an initial deposit of Rs 5,000. Any deposits exceeding Rs 5,000 must be in multiples of Rs 1,000.
During a recent review meeting, Finance Minister Nirmala Sitharaman urged leaders of public sector banks to boost their deposit growth rate to align with the faster pace of credit growth.
At that time, the growth rate of deposits was lagging by 3 to 4 percent compared to the credit growth, which posed a potential risk of an asset-liability mismatch within the banking system.
