Private lender Kotak Mahindra Bank is making fixed deposits (FDs) more precious for everyone, especially senior citizens! On December 11th, they raised interest rates on FDs under Rs 2 crore by up to 85 basis points. Regular customers across all tenures can now enjoy a 50 bps bump, while senior citizens reap the full 85 bps bonus, meaning their money grows even faster.
Not only are senior citizens and short-term investors benefiting from the rate hike, but Kotak Mahindra Bank is also offering a special treat for those closing in their money for longer periods. FDs with tenures extending from four to five years now enjoy a 75 bps jump, taking their interest rate from 6.25% to a delightful 7%. So, whether you're a seasoned saver or just looking for a longer-term option, Kotak Mahindra Bank has a tempting FD waiting for you.
At its December 2023 MPC meeting, the central bank decided to hold the repo rate at 6.5%, marking the fourth straight policy review where the rate has remained unchanged. This stability comes after a series of hikes totalling 250 basis points since May 2022, demonstrating the RBI's cautious approach to managing inflation and supporting economic growth.
While Kotak Mahindra Bank is showering customers with higher FD rates, the Reserve Bank of India (RBI) has a slight wrinkle to iron out. Governor Shaktikanta Das has expressed concern that banks haven't fully passed on the 250 basis point hike in the repo rate to their lending and deposit rates.
RBI data reveals the size of the opening. Between May 2022 and October 2023, the weighted average domestic term deposit rate of banks increased by 233 basis points, while the weighted average lending rate on fresh loans rose by 196 bps. However, the corresponding increase in outstanding term deposit rates and outstanding lending rates of banks was significantly lower, at 157 bps and 112 bps, respectively.