Will FD interest rates stop rising now?

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The process of changing Rs 2,000 notes started on Tuesday at the banks. Ten notes of Rs 2,000 can be exchanged at a time. In this way, notes up to Rs 20,000 can be changed at a time. It is being estimated that Rs 2 lakh crore cash can come in the form of deposits in banks. It is possible that because of this the interest rates of fixed deposit (FD) will not increase for now.

Actually, all the banks of the country are going through a phase of cash crunch. According to RBI data, in the financial year 2022-23, there was an increase of 15 percent in the demand for loans in banks. During this period, the outstanding of the banks increased to Rs 136.75 lakh crore. In the same period, the deposits of the bank increased by only 9.6 percent. Because of this, banks have to raise expensive loans from the market.

According to the RBI, it had stopped printing of Rs 2,000 notes in 2018-19 itself. The central bank said that by the end of March 2018, the share of Rs 2,000 notes in the circulation of currency notes in the country was 37.3 percent and by the end of March this year, the share decreased to 10.8 percent. On this basis, there are about 3.7 lakh crore Rs 2,000 notes in the market. Experts estimate that by September 30, the deposits of banks can increase by up to Rs 2 lakh crore.

How will it be beneficial? At present, the loan taken from the bank market in lieu of FDs and bonds, has to pay an interest of 7-8% annually. To meet the loan demand, they may have to increase the deposit rates further. Most of the deposits that will come to banks in the form of 2000 rupees will come in savings accounts only, on which banks will have to pay interest of 2.7 to 3.5 percent only. Due to this, there can be a reduction in loan rates in future. Experts estimate that the deposit rates have now reached their peak. Due to this, there is less scope for increasing the interest rates of FD in the coming days.