The decision to keep the interest rates unchanged is good news for investors of fixed deposits. After the decision by the RBI, now the repo rate and reverse repo rate remain at the rate of 4 percent and 3.35 percent respectively. Because of this, now banks will avoid reducing the FD rates. At the same time, this step of RBI for those taking loans from banks means that banks will also stop cutting interest rates on loans for the time being.
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Those investing in FDs, especially senior citizens, can get relief. The decision not to make any change in the repo rate will prevent banks from cutting FD rates. Major banks slashed the interest rates on fixed deposits after the RBI’s decision to cut the repo rate in March and May. Apart from small savings schemes, senior citizens can choose even more options.
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The Prime Minister Vay Vandana Yojana and Senior Citizens Savings Scheme are getting 7 percent interest. The RBI has recently launched floating rate bonds. They are getting 7.15 percent interest. The interest rate on these bonds will change every six months, so this may change again on January 1, 2021.
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Although there has been no change in the policy rate, however, this is the right time for new customers to take a loan. In loans linked to external benchmark, it is necessary to see how much margin banks are taking above the external benchmark and what is the risk premium? Those who are eligible for the Pradhan Mantri Awas Yojana can also consider taking a loan. The Pradhan Mantri Awas Yojana provides interest subsidy on loans.
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Public sector Canara Bank has raised interest rates on FDs. This public sector bank has increased the interest rate of FD from two years to 10 years by 0.2 percent. The new rates come into effect from 27 November. The new interest rates are applicable to deposits below Rs 2 crore. At the same time, the bank has increased the interest rate on FDs maturing in two years by 0.2 percent. Now, on term deposits of maturity of two years and less than three years, now interest of 5.4 percent will be given.