Why this is not the time to take on very long-term fixed deposit investment

For periods longer than 3 years, it is a good idea to explore debt mutual funds that offer indexation benefits and lower the tax outgo

Banks have raised their fixed deposit (FD) interest rates following the central bank's 190 basis point increase in the repo rate since May.

Retail inflation in the country was at a five-month high at 7.4 per cent in September. "This, along with the aggressive monetary policy action by the major central banks and pressure on the rupee, should lead the Monetary Policy Committee (MPC) to opt for further repo rate hikes, which in turn should lead the banks to steadily increase their FD rates," says Gaurav Aggarwal, senior director, Paisabazaar.

What's happening

Banks increased deposit rates to meet growing credit