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Fixed deposit investors likely to feel the pinch after SBI cuts rates

The SBI has cut deposit rates by 5-75 basis points across tenures. Shorter-tenure deposits have seen a higher quantum of cut than longer deposits

Sanjay Kumar Singh 

SBI plans to mop up Rs 5,000-crore debt capital via tier-II bonds
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The SBI has cut by 5-75 basis points across tenures. Shorter-tenure deposits have seen a higher quantum of cut than longer deposits.

On an investment of Rs 1 lakh made for 45 days, a person would have earned an interest income of Rs 709 earlier and will earn Rs 616 now, a loss of Rs 93. On the same amount invested for 10 years, he will earn Rs 187,714 now, a reduction of Rs 1,770. Fixed deposit investors will feel the pinch and will need to align their expectations to this reality. Experts said conservative investors, who wish to stick to (FDs), should look around and lock into the best rates available for two-three years, as rates may go down further. A limited amount can go into FDs of small banks, which offer higher returns than large Post Office small savings schemes should also be looked at.

First Published: Tue, July 30 2019. 01:28 IST
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