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SBI hikes short-term FD interest rate: Check details here

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Following closely on the heels of private sector lender, HDFC Bank, (State Bank Of India) has announced an increase in Fixed Deposits (FDs) Rate of interest.

According to SBI’s website, the bank has increased the interest rate on FDs below Rs 2 crore with a tenure of 1 year to less than 2 years by 10 basis points. These FDs will now earn 5.1% (increased from 5%) with effect from January 15, 2022. Senior citizens will earn 5.6% (above 5.5%).

Source: SBI Website

Has the rate reversal trend started?

In December 2021, SBI increased its base rate by 0.10 per cent or 10 bps, according to its website. The new rate, i.e. 7.55% per annum, will be effective from December 15, 2021. This appears to be a signal for the beginning of the end of the low interest rate regime. This is because apart from being a reference rate for borrowers, the base rate also serves as an indicator of the direction of the overall interest rate in the economy.

A rise in the base rate indicates that the trend of falling interest rates is finally reversing and we may see some further hike in interest rates going forward. After falling to the level of $65 in early December, crude oil (WTI) prices have now risen to close to $72 on December 16, indicating revival of global demand. If the impact of the Omicron version of the coronavirus on the global economy remains manageable and there is a double digit increase in the WPI (Wholesale Price Index) in India, which may later have an impact on the CPI (Consumer Price Index), then in the times to come RBI is likely to increase the rate. The future cannot be ruled out.

Interest rate hike is good news for fixed deposit investors earning the lowest returns in the last two decades.

Banks are now gradually increasing the FD rates.

HDFC Bank has increased the interest rates on Fixed Deposits (FDs) for select tenures. These rates will be effective from January 12, 2021. According to the bank’s website, it has increased the interest rates on FDs of less than Rs 2 crore by five-10 basis points with maturity period above two. According to the website, now FDs between 2 years 1 day and 3 years will get 5.2%, 3 years 1 day and 5 years 5.4% and 5 years 1 day and 10 years FD will get 5.6%.
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Usama Younus

Usama Younus is the owner and super admin of the site he's is an expert in news editing, tech and entertainment magazine management, and articles editing E.T.C.

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