Banking Khabar / Commercial banks have published their new interest rates for the month of Bhadra, with fixed deposit rates continuing to decline. The average interest rate on individual fixed deposits has fallen to 4.13 percent in Bhadra from 4.17 percent in Shrawan.
The latest figures show that the average rate has declined by 0.04 percentage points within a month. The downward trend in deposit rates indicates that returns available to depositors through fixed deposits are continuing to come under pressure.Similarly, the average interest rate on institutional fixed deposits has also declined. The average rate has been reduced to 3.08 percent in Bhadra, compared to 3.12 percent in Shrawan, marking a decrease of 0.04 percentage points.
Bank-wise fixed deposit rates
For Bhadra, commercial banks have set different interest rates for individual fixed deposits. Some banks are offering rates above 4 percent, while others have set their rates below the 4 percent level.
Among the banks, one has fixed the interest rate on individual fixed deposits at 4.55 percent. Another bank has set its rate at 4.50 percent, while several banks are offering rates of 4.15 percent and 4 percent. Similarly, some banks have fixed the rate at 4.10 percent, while others are offering 4.05 percent. A number of banks have set their rates at 3.85 percent, 3.80 percent and 3.76 percent, respectively.
The variation in rates means that depositors may receive different returns depending on the bank and the type and maturity period of their fixed deposit.
Returns on fixed deposits decline
The continued reduction in deposit interest rates directly affects savers who depend on fixed deposits for relatively stable returns. As banks lower their deposit rates, the interest income earned by depositors on newly opened or renewed fixed deposits also decreases.
The decline in fixed deposit rates is also significant for customers whose existing fixed deposits are approaching maturity. When such deposits are renewed at the prevailing rates, depositors may receive lower returns compared to previous periods.
For banks, lower deposit rates can help reduce the cost of funds. However, the changing interest-rate environment also influences competition for deposits and customers’ decisions regarding where to keep their savings.
Impact on deposit mobilization
The continued decline in deposit rates is expected to influence the deposit mobilization strategies of commercial banks. With fixed deposits offering comparatively lower returns, depositors may increasingly compare different banks and consider other investment opportunities based on their risk and return preferences.
At the same time, banks will need to balance deposit mobilization with the demand for credit and overall liquidity conditions in the financial system.
The latest reduction in fixed deposit rates therefore reflects the broader movement in the banking sector’s deposit pricing. With the average rate for individual fixed deposits now at 4.13 percent, depositors are likely to pay closer attention to bank-wise interest rates when renewing or opening fixed deposits in Bhadra.
