RBI rate cut pause: Opportunity to lock in FD rates; check top banks

Kolkata: The era of high interest rates is behind us. RBI cut the Repo Rate -- the key fountainhead interest rate in the country to which interest on all loans is pegged -- by 100 basis points between February and June, bringing it down from 6.5% to 5.5%. Contrary to expectations by some expert agencies, RBI has kept the rate unchanged in the August 4-6 meeting. As a result, the interest rates on FDs are expected to remain largely steady for the next several weeks.

Needless to emphasise this pause can offer a golden opportunity for many to deposit their money in FDs and lock in interest rates. The logic: key policy rates in India are expected to decline in the foreseeable future. Therefore, this is the time that one should lock in the longer tenure FDs. Let's have a look at the rates offered by a few major banks in the country.

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The country's largest lender, State Bank of India (SBI) is offering 6.3%, 6.8% and 6.8% for general customers, senior citizens and super senior citizens (those aged 80 and above) for FDs with three-year maturity period. For FDs between five years and 10 years, the rates are 6.05%, 7.05% and 7.05% respectively.

HDFC Bank is the largest private sector lender of India. For three-year FDs, it is offering 6.4% for general customers and 6.9% for senior citizens. For five year to 10 year maturity periods, the rates for these two age baskets are 6.15% and 6.65%.

The second biggest private sector lender, ICICI Bank, offers 6.6% (for general customers)on FDs with tenures between two years one day to 10 years. For senior citizens, the rate is 7.10%.

PNB is the second biggest public sector lender of India. It offers 6.5%, 7.0% and 7.3% to general customers, senior citizens and super senior citizens for tenures between three years to 1,203 days. The rates for FDs between five years and 1,894 days is 6%, 6.8% and 6.8% for the three age brackets respectively. For FDs with tenure between 1m896 days to 10 years, the applicable rates are 6%, 6.8% and 6.8% for general customers, senior citizens and super senior citizens.

If RBI cuts rates again in October, all banks could be slashing their interest rates on FD.