Fixed Deposits have always been an integral part of every individual's portfolio.
But, it's apperent that some recent changes demand for a review in this strategy.
Investors need to keep a close eye on the interest rate movements so as to get adequately benifited from Fixed Deposits.
Last year (i.e in 2008) we witnessed high rated on fixed deposits. This was partly due to liquidity crunch banks were dealing with. Just see this in light of increasing inflation we have seen.
Banks were easily offering higher interest rates for your deposits, for certain period deposits.
For example, interest rates for period of 365 days (or 780 days and 1000 days) were upto 10% p.a.
It made perfect sense to lock in money, then.
Now, the trend has completely reversed!
Over the past few months, interest rates offered by most banks on fixed deposits have reduced drastically.
Some of the data below, will prove this:| Term Deposits (Below Rs. 1 Cr.) | ||
| Banks | 365 to 729 days | 730 to 1094 days |
| State Bank of India | 6.50% | 7.00% |
| Bank of India | 6.50% | 6.50% |
| HDFC Bank Ltd. | 6.00% | 6.00% |
| ICICI Bank Ltd. | 6.50% | 7.00% |
| HSBC India | 4.75% | 5.00% |
| Axis Bank Ltd. | 6.75% | 7.30% |
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