Keeping money in banks’ fixed deposits becomes a deficit deal now. FD ‘s interest rates are going down quickly. Some banks ‘ interest rates on short-term FDs have reached near the interest rates on savings accounts. Actually banks still have a lot of money. Apart from this, people are also taking loans less. Therefore, they do not need funds from the depositor at the moment. This is the reason why they have started cutting short and long term FD interest rates. Due to low interest in FD, people are now going to invest in mutual funds, where the risk is more than that. Deposit of banks has decreased during the last financial year. So far in this financial year, it has increased by only two per cent. Investors are investing in mutual funds and equity-based investment instruments despite the risk of the stock market.
According to ‘Economic Times’ news, SBI is paying 2.9 per cent interest for FDs ranging from seven to 45 days, which is only slightly higher than the 2.7 per cent interest rate available on savings bank account. Interest of short term FDs of Kotak Mahindra Bank and HDFC is less than the interest on saving bank account.
Kotak Mahindra Bank is offering half a percent more interest to savings bank account holders than short-term FD customers. At the same time, HDFC Bank, Punjab National Bank are giving more than quarter percent interest. However, senior citizens get half a per cent more than the current rates. The interest on FD by banks has reduced the security of investors. Now they are investing their money in high risk instruments.