Major Banks Announce Higher FD Rates for Specific Demographics

In a significant move at the start of the year, India's leading financial institutions, SBI and HDFC Bank, have announced an increase in fixed deposit (FD) rates, particularly benefiting senior citizens above the age of 80. This initiative is part of a broader strategy to attract more savings by offering competitive returns.

Strategic Rate Revisions to Boost Savings

SBI has introduced a new category for super senior citizens, offering them an additional 10 basis points over the existing rates for senior citizens. On the other hand, HDFC Bank has revised its rates for bulk deposits, increasing them by 5-10 basis points across various tenors. These adjustments come at a time when the demand for rate cuts by the RBI to stimulate growth is widespread.

Innovative Deposit Schemes

Among the innovative schemes, SBI's 'Har Ghar Lakhpati' stands out, designed to help customers accumulate Rs 1 lakh or more through a pre-calculated recurring deposit scheme. This product aims to simplify financial planning and encourage a savings habit among minors as well.

Impact on Borrowing Costs

While higher deposit rates are beneficial for savers, they also lead to increased borrowing costs due to the revision in the marginal cost of lending rates, which are directly linked to the cost of deposits. This dual impact highlights the delicate balance banks must maintain between attracting deposits and managing lending rates.