Repo Rate Down By 0.25 %, Best Time Fixed Deposits

The last quarter of 2018 saw an increase in fixed deposit interest rates, due to factors such as an increase in loan to deposit ratio, falling value of Indian rupee and the rising crude prices. Owing to key rates rising by 0.5 per cent to 0.10 per cent, both, banks and non-banking financial companies raised their interest rates on fixed deposits.

However, the scenario has changed in the past few months and liquidity has been on the rise, which indicates that there may be a reduction in fixed deposits interest rates, anytime soon. As an investor looking to lock in money at best possible interest rates, this might be the optimum time to go ahead and find that fixed deposit with the best interest rate.

Reasons for fixed deposit interest rates to go down Speculations about the FD interest rates being lowered are rife. Here’s why there may be chances that the interest rates may come down further: Repo rate cut: The Reserve Bank of India (RBI) has cut the key policy repo rate by 0.25 per cent, and it now stands at 6 per cent. The rate cut will lower the cost of borrowing for the banks, thus the consumers will also pay lesser interest on loans. However, this also means that consumers will receive lower fixed deposit interest rates.

Increase in rupee in the system: Along with the repo rate cut, RBI has also tried to infuse liquidity into the system by allowing banks to exchange their excess dollars into rupees (with an overall limit of $5 billion for all banks). This means the amount of currency in banks will increase, and liquidity will rise. Therefore, banks might reduce FD interest rates.

Additionally, there may be changes in Indian political-economic scenario, due to elections, which may increase market volatility. It may hence, be the best time to invest in fixed deposit, and multiply your savings. Currently, banks are offering FD interest rates in the range of 5.5 per cent to 7.5 per cent (depending upon the tenor). Company FD rates are higher than those of banks for the same tenor. Bajaj Finance Fixed Deposit is offering interest rates up to 9.10 per cent, which can help you get stable returns. In addition to a high interest rate, you can also safeguard your investment portfolio from increasing market volatility.

With the highest safety ratings of FAAA/stable from CRISIL and MAAA/stable from ICRA, Bajaj Finance Fixed Deposit can help you ensure the highest safety of your investment amount. To maximize your returns, you can ladder your fixed deposits across multiple FDs (of different amounts) and varying tenors. This will help you gain the benefit of averaging of changing interest rates over a period and maintain liquidity with maturing FDs.