The Bank interests have gone up a notch after my last article and time is ripe without any hesitation to park your money as maximum as possible in Bank term deposit plans. I am saying this because the high interest regime is likely to wane now onwards in view of reduction in Cash Reserve Ratio (CRR) by Reserve Bank of India (RBI) from a high of 9% in July’08 to 5.5% now, injecting about Rs.150,000 Crores into the financial system. Further, the inflation has eased from a high of 13% to 9% necessitating a reduction in lending rates of the banks, which have shot up to as high as 14%. The high interest lending has started slowing down demands in consumer driven sectors like realty, automobiles, aviation, hospitality etc.
Banks have already started reducing prime lending rates and this, in the short run, is bound to reduce borrowing interests like interests paid on FD by the banks. The RBI and the finance minister is also pressurizing banks to cut prime lending rates, telling in effect to reduce term deposit rates. So the new-year or even Dec’08 is likely to see a sizable reduction in FD rates.
In view of all these, I suggest that put your money immediately in FD’s, which are giving now 10% to 11% for General Category (GC) and another additional 0.5% to Senior Citizen Category (SC). Listed below are a few bank’s ruling FD rates.
Bank of India: Short term 400 days = 10.5% for GC and 11% for SC, Medium term 401days to less than 2 years=10% for GC and 10.5% for SC, Longer term 2 years to 10years=9.75% for GC and 10.25% for SC.
Allahabad Bank: Short term 1 to 3 years=10.5% for GC and 11% for SC, Medium Term above 3years up to 5 years=9.75% for GC and 10.25% for SC. Long term above 5 years up to 10 years =9% for GC and 9.5% for SC.
State Bank Of India: Hurry up SBI has announced reduced rates from 1st Dec’08. Present rates are, Short term 1000 days =10.5% for GC and 11% for SC, Medium term 3years to less than 5 years=9.75% for GC and 10.25% for SC, Long term 5 to 10 years=9.25% for GC and 9.75% for SC. The rates would be less by 0.5% from Dec’08. SBI also gives additional interest on volume deposits of 15 lac and above by 0.25%.
Punjab National Bank: Short term 1 year to less than 2 years=10.5% for GC and 11% for SC, 2 to less than 3 years=10% for GC and 10.5% for SC, Medium term 3years to less than 5 years=9.75% for GC and 10.25% for SC, Long term 5 years to 10 years=9.25% for GC and 9.75% for SC.
Karur Vysya Bank: A private sector Bank but pays highest interest: Short term 1 to 3 years=11% for GC and 11.5% for SC, above 3years to 5 years=9.75% for GC and 10.25% for SC. The Bank has a special product, ‘Spouse Senior Citizen Scheme’ which gives 1% extra interest in the event death of a spouse. The scheme is for 1 year to 3 years. For details click the link http://www.kvb.co.in/scripts/Common.asp?Page=Spouse.asp
Please note that these rates are applicable only for Resident Indian Citizens and are not applicable for foreign nationals or even NRIs.