SBI Raises Short-Term FD Interest Rate: See Details Here

Closely following the private sector lender, HDFC Bank, the (SBI) announced a hike in fixed deposit (FD) interest rates.

According to the SBI website, the bank has raised the interest rate for FD below Rs 2 crore with a tenor of 1 year to less than 2 years by 10 basis points. These DFs will now earn 5.1% (instead of 5%), starting January 15, 2022. Seniors will earn 5.6% (instead of 5.5%).

Source: SBI website

Has the rate reversal trend started?

In December 2021, SBI raised its base rate by 0.10% or 10 basis points, according to its website. The new base rate, i.e. 7.55% per annum, will be effective from December 15, 2021. This seems to be the signal of a beginning to the end of the low rate regime. Indeed, in addition to being a reference rate for borrowers, the base rate also functions as an indicator of the direction of the overall interest rate in the economy.

A rise in the base rate indicates that the downward trend in interest rates is finally reversing and that in the future we may see some more interest rate hikes. Rising interest rates are good news for fixed deposit investors who have seen one of the lowest returns in two decades.

Banks are slowly starting to raise FD rates now.

HDFC Bank has increased interest rates on fixed deposits (FD) for certain maturities. These rates will come into effect from 12 January 2021. According to the bank’s website, it has raised interest rates on FDs worth less than Rs 2 crore with maturities above two from five to ten basis points. According to the website, FDs with seniority between 2 years 1 day and 3 years will earn 5.2%, 3 years 1 day and 5 years will earn 5.4% and 5 years 1 day and 10 years will earn 5. 6%. Click here to read the full story.

Stephen V. Lee