Amid fierce competition and in a drive to raise more deposits, banks began offering higher returns on FDs. The race was first taken off the block by the country's leading banks such as SBI and HDFC.
Fear of getting left behind led to a response from other small banks such as IDBI, though.
SBI also added a new category for super senior citizens above 80 years who would enjoy a differential rate of 10 basis points over the rates offered to the existing category of senior citizens. This initiative was taken by IDBI Bank (NS:IDBI) too.
The new fixed deposit for senior citizens called 'IDBI Chiranjeevi-Super Senior Citizen FD' from IDBI Bank. This fixed deposit is for persons aged 80 years and more.
The plan provides an excess of 0.65% interest above the regular fixed deposit rates. For this scheme, the interest rate is 8.05 % for a term of 555 days, 7.9% for a term of 375 days, 8% for a term of 444 days, and 7.85% for 700 days. The scheme is effective from January 13, 2025. As part of the new innovative savings schemes, the State Bank of India (NS:SBI) has also introduced a ‘Har Ghar Lakhpati’ (lakhpati in every home) recurring deposit scheme. The objective of the scheme is to enable individuals to accumulate a corpus of Rs one lakh or more through small monthly savings over three to ten years.
Individuals, who are above 10 years of age, are allowed to open account.
For accounts of those under 60 years, interest rates are 6.75 per cent for three and four years tenures, while 6.50 per cent for five to 10 years tenures. For ages above 60, it gives 7.25 per cent for three and four years tenures and 7 per cent for five to 10 years tenures.
Similarly, NS:BOB has introduced liquid fixed deposits by Bank of Baroda. Customer can withdraw cash in units of Rs 1,000 by making an initial deposit of Rs 5,000. Similarly, deposits higher than Rs 5,000 also need to be in multiple of Rs 1,000.
Finance Minister Nirmala Sitharaman, at a review meeting held earlier, asked the chiefs of public sector banks to accelerate the growth rate of their deposits to match the quicker pace at which the credit is growing.
The growth rate of deposits at that time was 3 to 4 per cent slower than the pace at which credit was growing in recent months, which seemed to pose a risk of an asset-liability mismatch in the banking system.
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