- Date : 08/02/2023
- Read: 2 mins
RBI increases repo rate to 6.5% by 25 bps.
The RBI had its first monetary policy meeting post the Union Budget and decided to increase the repo rate to 6.5% by 25 basis points. FD customers or investors will be on the receiving end of this as the banks pass on the benefits to them. SAG Infotech MD Amit Gupta says it will be interesting to see how much FD rates increase after the repo rate hike. He added that the bank lending rate hike would indeed impact new loan borrowers and depositors. Banks increase the interest rates on customer loans after a repo rate increases, and the banks extend the term instead of increasing the EMI after a rate hike.
Also Read: These banks increased their fixed deposit rates in July 2022 after a hike in repo rates.
FD Investors Get Good News
Clear CEO and Founder Archit Gupta says it's good news for FD investors because banks will increase deposit rates. He said the deposit rate would increase by a small margin, making fixed deposits more attractive. It will thereby result in providing fixed income. Investors will be looking to invest in fixed deposits, creating a shortage of money in the market. It would result in reduced expenditure by retail bank customers.
Updated Bank Fixed Deposit Rates
Top banks in India, like Kotak, ICICI, Axis, HDFC, and State Bank of India, currently provide a 3-6.35% interest rate. SBI provides 6.75% interest for 2 years, Axis Bank provides 7.26%, HDFC bank provides 7%, ICICI bank provides 7%, and Kotak bank provides 6.75% for two years. IndusInd Bank and IDFC First Bank provide 7.5% interest on fixed deposits.
Also Read: Did you know this about the RBIs repo rate?
Hike In Interest Rates
RBIs Monetary Policy Committee (MPC) increased the key benchmark interest rate to 6.5% by 25 basis points on Wednesday. 4/6 MPC members agreed to the repo rate hike.
The Monetary Policy Committee (MPC) is headed by Shaktikanta Das and started the meeting, which lasts three days, on February 6. The hike spree started in May 2022 to keep inflation in check. RBI increased the benchmark interest rate by 35 bps when it reviewed the monetary policy in December. It followed three 50 bps rise consecutively.
