Most of the investments in banks' FDs are made by senior citizens and secured returns
The total deposits of banks increased to Rs 145 lakh crore during the Corona period
Even if the borrowers are disappointed with the decision of the Reserve Bank, those who deposit money in the bank will necessarily be happy. You may get higher interest on Fixed Deposit (FD) in future. This is because the Reserve Bank has announced an increase in the Cash Reserve Ratio (CRR).
First let's understand what is
CRR . CRR means that banks have to deposit a certain portion of their balance sheet with the Reserve Bank. The Reserve Bank pays interest on these deposits to the banks. Right now it’s 3%. According to the Reserve Bank, it will increase it to 4% in the next 4 months i.e. till May. This means that when banks get 1% higher interest, the bank will also give you higher interest.
Double the CRR The
Reserve Bank will double the CRR. For the first time it will do 3.5% by March 27, 2021. The second will increase it to 4% by May 22, 2021. This has led to an increase in interest rates in the future.
Senior citizens are worried about low interest rates.
Right now FDs are getting lower interest rates. It is between 5-6% in government and big banks. When the inflation rate is higher than that. So this is a concern for senior citizens and those who want to invest in a very conservative and safe way.
Increased bank deposits In the
time of Corona, people relied on banks' FDs. Despite low interest rates, bank deposits continued to rise. At present, banks have deposits of about Rs 145 lakh crore. Most of the money is from people who are senior citizens or pensioners.
Who will be harmed by
the decision of the Reserve Bank This decision will hurt those who take home loan, auto loan, personal loan, education loan or any kind of loan. Even though the interest rate has not increased at present, the interest rate on the loan will start going up when the CRR goes up.
Banks also did not give relief. The
Reserve Bank recently reduced the rate by 115 basis points (bps). But banks have not given full benefit to the borrowers. Banks benefit customers between 50-60 bps. Now when interest rates rise, banks will raise them immediately. This is an advantage for banks in such a situation. 100 bps is equal to 1 percent.
If demand grows, interest will rise. In
recent times, house sales in big cities like Mumbai, Bengaluru and Ahmedabad have been on the rise . House sales in Mumbai are even higher than the previous level of Corona. This is because there is a 3% reduction in stamp duty. In addition, interest rates are low. It is estimated that an increase in house sales will lead to a rise in interest rates. According to Enrock chairman Anuj Puri, work from home has increased the demand for housing. More people will choose to buy a house in the future.
What the RBI did today The
Reserve Bank has kept the CRR, repo rate and other rates the same. No changes made. A direct signal from the Reserve Bank is that the prospect of a reduction in interest rates is now over. As such, the CRR will increase. The CRR has been 4% between February 2013 and January 2020.
5.4% interest on FD The interest rate on FD of the
country's largest bank State Bank of India (SBI) was 6% in February 2020. It was at 5.40% in May. Around this, all the big banks have FD interest rates.
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