Good News for FD Depositors! RBI Raises Threshold for Bulk Deposits, Earning Higher Interest – Times Now

Good News for FD Depositors! RBI Raises Threshold for Bulk Deposits, Earning Higher Interest – Times Now

Key Highlights:

RBI increases the threshold for bulk fixed deposits (FDs)
Higher interest rates offered for bulk FDs
Banks can now accept FDs above ₹5 crore from individuals and institutions
Deposits above ₹5 crore will earn interest rates fixed by the Marginal Standing Facility (MSF) rate plus a spread
Encouraging higher savings and investments

The Reserve Bank of India (RBI) has raised the threshold for bulk fixed deposits (FDs), offering depositors higher interest rates. This move is aimed at encouraging higher savings and investments, particularly from institutions and high-net-worth individuals (HNIs).

Previously, banks could accept FDs up to ₹5 crore from individuals and institutions, with interest rates determined by the bank’s internal policies. However, under the new guidelines, banks can now accept FDs above ₹5 crore, and these deposits will earn interest rates linked to the Marginal Standing Facility (MSF) rate plus a spread.

The MSF rate is the rate at which banks borrow from the RBI overnight. It is currently set at 6.50%. Therefore, deposits above ₹5 crore will earn interest rates of at least 6.50% plus the spread offered by the bank.

This higher interest rate on bulk FDs is expected to attract institutions and HNIs, who often look for higher returns on their investments. It is also expected to encourage individuals to save more in FDs, as they can now earn a more competitive interest rate on deposits above ₹5 crore.

Banks have welcomed the RBI’s move, saying it will help them mobilize more funds at a time when credit demand is slowing down. It is also expected to increase competition among banks to attract depositors, leading to potentially better interest rates for all depositors.

Depositors should consult with their banks to understand the specific interest rates and terms offered for bulk FDs. This can help them make informed decisions and maximize their returns on savings.