In response to tight rivalry for deposits, banks have begun to offer larger yields on FDs. While major banks like SBI and HDFC were the first to hike interest rates on FDs, smaller banks like IDBI followed following for fear of falling behind in the race.
SBI has launched a new category of super senior citizens, who are beyond the age of 80 and will receive 10 basis points more than seniors. IDBI Bank has also implemented this method.
IDBI Bank has introduced the ‘IDBI Chiranjeevi-Super Senior Citizen FD’, a fixed deposit product specifically for people aged 80 and up. The scheme provides an additional 0.65% interest above regular fixed deposit rates. The interest rates for this scheme are 8.05 percent for a 555-day tenure, 7.9 percent for 375 days, 8% for 444 days, and 7.85 percent for 700 days. The program takes effect on January 13, 2025.
As part of its new creative savings initiatives, the State Bank of India (SBI) has launched a recurring deposit system called ‘Har Ghar Lakhpati’ (lakhpati in every home). The scheme’s goal is to help individuals establish a corpus of Rs one lakh or more by small monthly savings over three to 10 years.
Individuals, including youngsters aged ten and up, are eligible to open accounts.
For those under the age of 60, the scheme provides interest rates of 6.75 percent for three and four-year terms and 6.50 percent for five to ten-year terms. For people over 60, it offers 7.25 percent for three and four years, and 7.25 percent for years five through ten.
Similarly, Bank of Baroda has introduced liquid fixed deposits, which allow customers to withdraw in units of Rs 1,000 after making an initial deposit of Rs 5,000. Deposits greater than Rs 5,000 must also be in multiples of Rs 1000.
At a previous review meeting, Finance Minister Nirmala Sitharaman asked the CEOs of public sector banks to increase the growth rate of their deposits to match the faster rate of credit growth.
Deposit growth was 3 to 4 percent slower than loan growth in recent months, raising concerns about asset-liability mismatches in the banking system.
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