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In response to growing competition from the capital markets, several major banks are introducing new deposit schemes offering higher interest rates to attract customers. These innovative fixed deposit (FD) schemes are designed to appeal to investors seeking safer, higher returns compared to equity market investments.
Large banks, including SBI, IDBI Bank, and Indian Bank, have rolled out special FD schemes with attractive interest rates, available until September 30. These schemes offer rates ranging from 7.05% to 7.35%, with senior citizens receiving even higher rates. SBI’s Amrit Kalash FD, for instance, offers up to 7.60% for senior citizens on a 400-day deposit, while IDBI Bank’s Utsav FD provides rates between 7.05% and 7.85% based on tenure. Indian Bank’s IND Supreme and IND Super schemes offer 7.05% and 7.25%, respectively.These new schemes, offering competitive interest rates and flexible features, are part of a broader strategy to attract and retain depositors.
The US Federal Reserve’s recent decision to cut interest rates by 50 basis points has led to speculation that the Reserve Bank of India (RBI) may follow suit. Such a move could prompt banks to lower their interest rates, potentially reducing the attractiveness of current FD schemes. The RBI’s decision will likely be influenced by domestic inflation rates and economic conditions.
Recent bank Initiatives
Federal Bank has revised its FD rates as of September 16, offering general citizens rates from 3% to 7.4% and senior citizens rates from 3.5% to 7.9%. The highest rates of 7.4% and 7.9% are available on tenures of 777 days and 50 months.
Jana Small Finance Bank has introduced a “Liquid Plus” FD product offering 6.75% interest for tenures between 7 and 180 days. This scheme is designed for both retail and high-net-worth individuals, featuring short-term investment options with enhanced flexibility, including T+0 redemption and partial withdrawal options.
Bank of Baroda has launched a Systematic Deposit Plan (SDP), a recurring deposit product that mimics systematic investment plans (SIPs) in mutual funds. The SDP allows small monthly contributions and offers additional benefits such as higher interest rates for senior citizens and overdraft facilities.
Fintech collaboration is also on the rise, with Tarrakki partnering with Suryoday Small Finance Bank to develop digital fixed deposit products. This partnership aims to enhance the efficiency of deposit onboarding and management through advanced technology.
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