InvestorQ : Why is there a sudden rise in demand for bank fixed deposits in the last few months?
Mahima Roy made post

Why is there a sudden rise in demand for bank fixed deposits in the last few months?

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1 month ago
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Recently, a lot of investors are once again appearing to be interested in FDs of banks and that has largely to with better rates. As RBI hiked repo rates by 190 bps in last 4 months, most private banks have hiked bank FD rates by up to 125 to 150 bps for top maturities. FDs are suddenly looking like a viable option to invest in. FDs have become more attractive today are giving positive real returns with yields of 6.5% to 6.75%. In last few months, equity markets were extremely volatile while debt funds took capital depletion on higher bond yields. In contrast, Bank FDs give safety and stability of returns.

With facilities like loan against FDs and sweep facility online, FDs are fairly liquid too. Also, tax breaks are gone for dividends on debt funds and equity funds and even for capital gains. That is a strong justification to choose FDs. Senior citizens get smartly higher rates with additional tax breaks, apart from 80C exemption on 5 year plus FDs. Above all, global risk and uncertainty have boosted FDs. Safety of principal is paramount in these markets and returns are the icing on the cake.

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