How to lock smartly into bank FDs as rates peak over next 2-3 quarters

Consider laddering to ensure liquidity and to avoid reinvestment risk

As the Reserve Bank of India (RBI) raised the repo rate, interest rates on bank fixed deposits (FDs) rose in 2022. Select bank FDs are offering over 8 per cent now, whereas a year ago, leading nationalised banks were offering slightly above 5 per cent. Experts say the best opportunities for locking into FDs for the long term will arise over the first two-three quarters of 2023.

Will FD rates rise further?

Since May 2022, the RBI has hiked the repo rate by 225 basis points (bps). Experts are of the view that the rate hike cycle is in its last leg,