Why are banks reducing the FD and RD interest rates?
Multiple macroeconomic and banking sector dynamics influence FD and RD interest rates. Here’s why they might be on the decline: ● RBI’s Monetary Policy: The Reserve Bank of India (RBI) controls repo rates. A cut in repo rates often leads banks to reduce FD and RD interest rates. ● Inflation: Lower inflation can reduce FD and RD interest rates to maintain real returns. ● Demand and Supply: Banks might decrease rates when there’s a surplus of funds. ● Economic Environment: Banks often cut rates to boost lending in a slow-growing economy. ● Global Factors: Global economic events can influence domestic interest rates. In essence, the FD and RD interest rates reflect not just bank policies but are a result of broader economic factors. Monitoring these can offer insights into possible future adjustments.