In recent developments, some prominent banks in India, including IndusInd Bank, Punjab National Bank (PNB), and Axis Bank, have decided to slash the interest rates on their Fixed Deposits (FDs), delivering unwelcome news to those who rely on these investment avenues. The cuts, affecting FDs with amounts less than 2 crores, have left depositors with diminished returns on their investments.
IndusInd Bank, for FDs ranging from 1 year 7 months to 2 years, has implemented a reduction of 25 basis points. Consequently, the new interest rate post-cut stands at 7.50%, down from the previous 7.75%.
Similarly, Punjab National Bank has taken a similar step, reducing interest rates by 25 basis points for FDs maturing between 1 year 3 months and 2 years. The revised interest rate is now 7.25%, a drop from the previous 7.50%.
Axis Bank, in alignment with the trend, has cut interest rates by 20 basis points for FDs maturing between 1 year 3 months and 2 years. The revised interest rate now stands at 7.30%, down from the earlier 7.50%.
This move comes in the wake of a 50 basis points increase in the repo rate by the Reserve Bank of India (RBI) on July 8, 2023. Such increases in the repo rate lead to higher borrowing costs for banks, prompting them to initiate a reduction in interest rates on FDs. This domino effect places an additional burden on those looking to secure loans, as well as those relying on FDs for a steady and reliable return on investment.
For individuals who prefer the safety and stability offered by FDs, these rate cuts translate to a significant setback. The diminished interest rates mean that the returns on their FDs will be lower than anticipated, impacting their overall investment strategy.
As the financial landscape continues to evolve, depositors and investors must stay vigilant, considering alternative investment options and adjusting their strategies accordingly to navigate these challenging times.