On June 6, the RBI announced a shortage of 50 basis points in the repo rate in the Monetary Policy. This is more than estimated. The repo rate was estimated to have a shortage of 25 bps. This decision of RBI has given home loan customers a chance to celebrate. The reduction in repo rate will benefit both new and old customers of home loan. However, it is bad news for those who keep money in the fixed deposits of banks. The question is, what should such customers do?
This year the repo rate has decreased by 1 percent
Rbi After reducing the repo rate, banks will reduce the interest rates of home loan, car loan and personal loan. Also they Fixed Deposit Will also reduce the interest rate. In February this year, RBI first reduced the repo rate by 25 basis points. For the second time in April, he had a shortage of 25 BPS at a repo rate. Today he has reduced the repo rate by 50 bps for the third time. A deficiency of 50 BPS means that now banks will have to change the interest rates of their home loan and car loan soon.
Why do banks reduce interest on FD?
Banks are the highest earning from giving loans to customers. The more they give home and car loan to customers, the more they earn. However, after reducing the repo rate of RBI, they will have to reduce the interest rate of home loan, car loans and personal loans. For this, bank fixed deposits and savings deposits will also reduce the interest rate. This year, after reducing the repo rate twice, many banks have already reduced interest rates on their fixed deposits.
How much can banks reduce the interest of FD?
Experts say that in the coming days, government and private banks will reduce the interest rate of their fixed deposits. However, banks will reduce the interest rates of FD by 50 bps, do more than this or reduce it, it is not yet known. This decision will be taken according to its needs of bank funds. The bank that will need more funds can reduce the interest rate. The bank who will need less funds can reduce the interest rate more.
What do you want?
If you have already got FD in the bank, then you do not need to worry till its maturity. The interest rate at which you have done FD in the bank will continue to get you until your FD becomes matured. If your FD is going to mature soon, then you have to think about it again. The bank may ask you to renew FD. However, the bank will offer a lower interest rate on it than before. In such a situation, it would not be better for you not to renew that FD. You should withdraw your FD money. You can check the interest rate of other banks. There are still many banks which are offering good interest rates on FDs. You can get new FD in those banks.
Also read: Home Loan: Good news for home loan customers, EMI will decrease for the third time in 5 months
Do you want to make a new FD?
If you want to make a new FD, then you have to make a little hurry. After a decrease in repo rate, banks may take some time to reduce the interest rate on FD. Before you reduce interest on bank FD, it will be better to get FD with the bank, which is offering an attractive interest rate. There are currently many banks which are offering interest rates from 7.5 to 8 percent on long -term FDs. It has to be kept in mind that it will be good to do at least 1.5 to 2 years FD, as the rebuke in the repo rate is expected to continue in the next months. This means that whenever the repo rate decreases, the bank will reduce the interest rate on FD.