FD Rates Hike: Finance Minister launches special deposit scheme for women, pressure on banks to increase interest rates on FD

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FD Rate Hike: Finance Minister Nirmala Sitharaman has announced a special deposit scheme for women, in which women will get 7.5 percent interest on deposits of only two years.

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The interest given by the government to women in this scheme is much less than the interest given by the banks for the same period. In such a situation, after this announcement by the Finance Minister, the pressure on the banks to increase the interest rates has increased.

Pressure on banks to increase interest rates on savings

While presenting his fifth budget on February 1, 2023, the Finance Minister announced a special deposit scheme for women called Mahila Samman Saving Certificate. Under this scheme, only 7.5 percent annual interest will be given on deposits of two years’ duration.

The Finance Minister has doubled the investment limit in the deposit scheme for senior citizens from Rs 15 lakh to Rs 30 lakh, not only for women but also for senior citizens, which earns an interest of 8% per annum. After this announcement by the Finance Minister, the pressure on the banks to make their deposit schemes attractive has increased. To woo the depositors, banks will have to take a decision to increase the interest rates on fixed deposits.

Cash problem in front of banks

Similarly, banks are facing the problem of cash crunch to meet the tremendous demand for credit. To maintain the availability of cash, banks have to woo the depositors. Due to which banks can announce to increase interest rates in the coming days. On May 4, 2022, the RBI started the process of increasing the repo rate, after which banks had to increase the repo rate by 2.25 percent in five phases.

Banks put the entire burden of the loan on the customers. But banks did not increase deposit rates in comparison to that. The credit growth rate in the banking sector in 2022 has been 14.9 percent, which means banks have given huge loans. But deposit growth in banks has increased only at the rate of 9.2 per cent. Whereas in 2021, the debit growth rate was 10.3 percent, which was more than the 9.2 credit growth rate.

Banks are giving less interest!

In recent times, from SBI to ICICI Bank, RBL Bank, Axis Bank and IDFC First Bank have also decided to increase the interest rates on deposits. But the interest given on most FDs is less than the 7.50 percent interest rate of the Finance Minister’s Special Deposit Scheme Mahila Samman Saving Certificate. That is, it is clear that in the coming days, you can get more interest on getting FDs in banks.

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