Traditionally, banks raise interest rates on fixed deposits when they face challenges in securing funds to meet the demand for loans. Additionally, the most recent inflation data, with a rate of 4.7% in April suggests a potential conclusion to the current cycle of rate hikes, added Professor Vijay Victor. If a fraction of these deposits remains with the banks at least for a few months, there is no need for them to increase the rates to attract new deposits. Over the next 3-4 months, it is expected that the deposit base of the banking system will expand as a result of approximately 30% of the withdrawn notes being returned as deposits. “The two main reasons for the muted FD rates are the withdrawal of ₹2000 notes and the improving inflationary conditions," said ProfessorVijay Victor, Assistant Professor & Co-Chair – Accounting, Economics and Finance, T A Pai Management Institute ![]() ![]() ![]() FD rates are expected to remain subdued in the next six months
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