Five banks increased FD rates with RBI’s Decision to increase Repo rate; Know how much rate increased

The Reserve Bank of India (RBI) stated on Wednesday that the Repo rate would be raised from 4 percent to 4.40 percent in order to manage inflation.

Following this, many banks raised lending interest rates. At the same time, several banks are raising their interest rates. Within 24 hours after the RBI’s announcement, banks began raising house loan and other interest rates. It is encouraging that some banks have begun to raise the interest rates on their FDs as well.

Five banks increased FD rates

A day after the RBI rate hike, at least five banks raised their FD rates. Analysts anticipate that additional banks will soon announce increases in lending and deposit rates. Kotak Mahindra Bank announced in a statement that it has boosted fixed deposit interest rates by 30 basis points and 35 basis points, respectively, for terms of 390 days and 23 months.

These banks increased rates

A group of banks raised their fixed-income (FD) interest rates shortly after the Reserve Bank of India (RBI) raised the key policy rate in an unannounced statement on May 4. Bandhan Bank, Kotak Mahindra Bank, Jana Small Finance Bank, Bank of Baroda, and ICICI Bank are among these lenders. These lenders have raised deposit rates for retail customers across multiple tenor baskets.

Rate hiked on these FDs of Kotak and Bandhan Bank

Kotak Mahindra Bank announced in a statement that it has increased fixed deposit interest rates by 30 basis points and 35 basis points for terms of 390 days and 23 months, respectively. Bandhan Bank has also boosted the interest rate on one-year deposits by 50 basis points for deposits less than two years to 18 months and above 18 months.

This comes after banks raised loan rates. Many banks have already raised loan rates. Among these are Bank of Baroda and ICICI Bank. The external benchmark lending rate at ICICI Bank has been raised by 40 basis points to 8.10 percent.

Good news for fixed deposit holders

Analysts believe that more banks will shortly raise lending and deposit rates. The central bank hiked the repo rate by 40 basis points to 4.4% on May 4 for the first time in nearly two years, since the pandemic began in 2020. The RBI’s action will have an impact on borrowers. Analysts believe this is good news for individuals who invest in fixed deposits.

According to Prakash Agarwal, a banking expert and president of financial services at India Ratings and Research, because approximately 40% of the banking system’s loans are repo-linked, they are automatically increased with a rise of the same amount in all repos.