Fixed Deposit Rates May Rise Further. Here’s Why



Fixed deposits are the most sought after financial instruments by investors of all income segments and risk appetite. As an investor, we are on the lookout for deposits with better rates and look forward to economic situations which might bring an increase so that we can lock in some surplus money for an investment goal.

Following the repo rate cut by the Reserve Bank of India in February, 2019, one would expect that there will be a cut in the deposit rates as well. However, there is a possibility of further rate hikes which could bring happiness and more earnings to you as an investor. Let us look at how deposit rates are expected to rise further –

During the last decade, deposits have been decreasing, and there has been a significant drop in the last three years owing to lesser returns on FD. Investors had started diverting their money from fixed deposits to other avenues. This led to a diversion of household income – the core of fixed deposit build up elsewhere.

However, in the coming few years, banks need Rs 25 lakh crores to meet the growth in credit offtake – loans for housing and businesses. A major chunk of this is supposed to come from deposits.

Thus, banks and financial institutions are expected to raise their interest rates over a period of time. All these will bring benefit to your time and demand deposits – fixed deposits especially.

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Good time to keep track of high yielding fixed deposits

  1. Company Fixed deposits always pay higher than bank deposits so you can expect to get high returns in the next few years from company fixed deposits like Bajaj Finance FD which currently offers 8.75% to regular customers. This is already a few percentage points above the banks’ deposit rates which range between 5.5% – 7.5%.
  2. You can also look to create a cumulative fixed deposit which will multiply the interest income by investing back the interest earned and paying a high lump sum at maturity.
  3. If you want to receive an interest payout periodically, you can lock in your amount at high interest to meet your recurring needs by opting for the non-cumulative option from Bajaj Finance Fixed Deposits.
  4. You can make multiple deposits at fixed intervals of time so that they will mature successively and offer an income stream when the time comes. This approach of laddering will greatly benefit if you lock-in a number of fixed deposits at these high rates.
  5. Senior citizens can use this time to increase their investments in fixed deposits and add to their existing corpus. If there is no immediate use of cash, the stable and assured returns can be gained by creating new fixed deposits when the Fixed Deposit Interest rates rise. Along with this, you can avail the benefit of an additional 0.35% interest rate with Senior Citizen Fixed Deposits from Bajaj Finance.

Bajaj Finance Fixed Deposits are highly stable as they have been rated safe by ICRA and CRISIL. With a minimum deposit amount of Rs 25,000, you can take maximum advantage. A long tenor of 15 months offers 0.25% extra interest. You can choose from a wide range of FDs with 12 to 60 months of maturity.

Easy online application process and availability of online FD calculator will make your investments in fixed deposits easy and profitable.

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