Diversify your investments beyond bank FDs to counter declining rates

Invest in a mix of small savings products, debt funds with quality portfolios to counter declining rates

In September 2016, the State Bank of India (SBI) one-year fixed deposit (FD) rate stood at 7.15 per cent. After the latest revision on May 12, 2020, it has plummeted to 5.50 per cent. In the wake of the 40-basis-point rate cut by the central bank, which has brought the repo rate to 4 per cent, banks may slash their FD rates further.

Within the banking space, park a part of your money with small finance banks (SFBs). “The highest FD rates offered by some of the SFBs are at least 200-300 basis points (bps) higher than the highest FD