In recent times, numerous banks, both private and government-owned, have raised the interest rates on Fixed Deposits (FD) for their customers.
Fixed Deposit schemes have traditionally been a favored and convenient method for saving and investing.
However, experts are now suggesting that the decision by the Reserve Bank of India to phase out the 2,000 rupee notes could potentially lead to a reduction in the interest rates offered by banks on FDs.
Impact of Depositing 2,000 Rupee Notes on FD Interest Rates
Experts argue that the depositing of 2,000 rupee notes in banks has resulted in a surge of cash.
A report by the State Bank of India (SBI) suggests that, taking into account the possibility that some of these notes were already held by banks in currency chests,
bank deposits could increase by at least 2 lakh crore rupees.
As per media reports, this surge in cash deposits might have implications for future FD interest rates.
Expert Opinions
Vineet Khandare, Founder and CEO of MyFundBazaar, informed News18 that if the influx of cash continues in the coming months, FD interest rates could potentially be reduced.
Typically, when the demand for loans rises, banks tend to increase the interest rates on FDs.
However, due to the depositing of 2,000 rupee notes, a significant amount of cash has already been deposited with banks.
Already Deposited: 1.8 Lakh Crore 2,000 Rupee Notes
According to Shaktikanta Das, the Governor of the Reserve Bank of India (RBI), approximately 1.8 lakh crore rupees worth of 2,000 rupee notes have already re-entered the banking system through deposits and exchanges.
