Bank FD giving negative interest rate ? Read more - YP Buzz Finance

 YP Buzz - 

                Major citizens and others depending on the income of the organized banking system (FD) will be in a position to be acquired at a store price that exceeds interest rates. The Reserve Bank of India (RBI) in its latest monetary policy review revealed that inflation was 5.3 percent in the current financial year.

                                       

Fixed Deposit

Last week, the RBI said


Inflation based on the Consumer Price Index (CPI) is now expected to be 5.3 per cent by 2021-22 with equitable risks.


At this rate, a fixed one-year deposit with the country's largest bank, the State Bank of India (SBI), would prefer a higher interest rate. The actual interest rate will be (-) 0.3% of the savings.


The actual interest rate is the rate of cards minus the rate of inflation. Inflation in August stands at 5.3%.


Even at the top of the 2-3 year period, the interest rate earned is 5.10 percent lower than the expected inflation rate of the current currency.


In the private sector, HDFC Bank market leader offers an interest rate of 4.90 per cent for the 1-2 year financial year while 5.15 per cent for 2-3 years.


However, smaller government savings schemes offer better benefits compared to fixed deposit rates. With a term deduction of 1-3 years, the interest rate offered is 5.5 percent higher than the inflation rate.


There is a natural benefit of transferring money from the FD bank to government savings programs as prices are slightly higher. Therefore, the real interest rate is in a good field.


Experts say it is common for real returns not to be ideal in a crisis situation even after recovery, given a way to encourage investors to overcome difficulties.


India is not selective and in fact, new asset allocation patterns will need to emerge, with more allocations to real assets arising from financial assets.


Actual ratings will only get worse for a while, as military reforms can take a while and it is important that financial literacy programs guide people in making the right decisions, says Grant Thornton Bharat's colleague Vivek Iyer.


"The negative interest rate, for those who are saving money in banks, these days, is a fact that those who have to invest have to deal with because of complex factors.


"The current savings rate offered by banks of almost 3.5 per cent and less than 5 per cent on a one-year deposit indicates a negative return, not even at the expected rate," said Resurgent India Managing Director Jyoti Prakash Gadia.


The impact of negative interest on bank savings deposits is evident, with a small increase in those deposits and the public is now looking for alternatives such as joint funds and equity for better returns.


The options, although high-risk, showed impressive growth that could continue until inflation or deposit rates rose sharply, Gadia said.


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 YP Buzz

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