Gloom for savers: How RBI repo rate cut will impact FD investments, savings
The recent spate of rate cuts by the Reserve Bank of India could be bad news for savers
Last Updated at October 23, 2020 19:35 IST
In a new set of measures to reduce the impact of coronavirus lockdown on the economy, the Reserve Bank of India (RBI) on Friday decided to cut the repo rate by 40 basis points from 4.4 per cent to 4 per cent. The reverse repo rate was also reduced by 40 basis points to 3.35 per cent. What will be the impact of these rate cuts on fixed deposits (FDs), one of the most popular investment avenues?
Many people prefer bank FDs over equities as the former are considered safe. However, the recent spate of rate cuts could mean another bad news for savers.
How RBI rate cut will impact investors
— Interest income from FDs is likely to fall further
— The rate cut comes as a pain also for senior citizens dependent on interest income from their FD investments
After RBI's previous rate cut in March, the country's largest lender State Bank of India had announced a reduction in fixed deposit interest rate by up to 50 bps. The rates were further revised on May 12, 2020.
Other major banks have also continued lowering interest rates on fixed deposits.
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First Published: Fri, October 23 2020. 19:33 IST