LIGHTS. ACTION

IF YOU ARE RISK AVERSE, GO FOR THE SPECIAL FD SCHEMES BANKS ARE OFFERING THIS FESTIVE SEASON

- NACHIKET KELKAR

Bank of Baroda has launched a new “Utsav Deposit” scheme with a term period of 400 days, which the public sector lender has launched specially for the festive season. Under this FD, general public will be offered an interest rate of 7.3 per cent, while senior citizens will get 7.8 per cent. Super senior citizens (people aged 80 and above) will get 7.9 per cent interest.

Bank of India, too, has recently launched a special 400-day retail term deposit scheme at interest rates ranging from 7.3 per cent (general public) to 7.95 per cent (super senior citizen). In case one opts for non-callable deposit, which means there is no premature withdrawal available, the interest rates offered are higher—between 7.45 per cent to 8.1 per cent.

The country’s largest lender, State Bank of India, too, has a similar 400-day term deposit scheme called Amrit Kalash, and a 444-day term deposit scheme called Amrit Vrishti, offering higher interest rates. Many other banks, including Union Bank, have launched special term deposit schemes.

This rush by lenders to offer special fixed deposit schemes at attractive interest rates comes against the backdrop of bank deposits growing at a slower pace than credit growth. Over the last few years, people have increasingly turned to stock markets and mutual funds. More than 024,000 crore is coming to mutual funds per month via SIPs (systematic investment plans) alone. Finance Minister Nirmala Sitharaman had in August nudged state-owned banks to undertake special drives to mobilise deposits.

Clearly, there was a need for banks to make term deposits slightly more attractive and that is why we see these special offers. But, the question is, should individuals park their money in long-term deposits now, or wait?