Punjab National Bank, Axis Bank reduce fixed deposit interest rates on select tenure. Check rates, tenure here

The interest rates on fixed deposits have been rising over the past two years after the Reserve Bank of India (RBI) hiked key policy rates. Since May last year, the Reserve Bank has increased the short-term lending rate by 250 basis points to contain inflation. The repo rate by the RBI acts as a benchmark for banks, NBFCs, and other financial institutions.  

As and when the central bank increases the repo rate, the borrowing cost for the commercial banks rises, which is passed on to the retail investors and vice versa.  On the other hand, the hike in repo rate can prompt banks to tweak their FD interest rates. 

However, in the past few months, banks have slowed down the revision of fixed deposit rates. Some banks have even reduced the FD rates for their depositors. 

Punjab National Bank 

In a first for a public sector bank, Punjab National Bank (PNB) has revised its interest rates on fixed deposits of less than Rs 2 crore. As of now, the lender has reduced fixed deposit interest rates on single tenure. According to the bank’s website, the new rates are effective from June 1, 2023. The bank has cut the interest rate on one-year deposits by 5 basis points (bps). The fixed deposit schemes will now fetch an interest rate of 6.75 per cent in place of 6.80 per cent.  

Last month, the bank decreased the interest rate on FDs maturing in 666 days to 7.05 per cent from 7.25 per cent. 

For the schemes for senior citizens, the bank has slashed the interest rate by 5 bps on deposits maturing in 1 year to 7.25 per cent from 7.30 per cent. 

In month of May, the bank reduced the deposit rate on FDs maturing in 666 days to 7.55 per cent from 7.75 per cent for senior citizens.  

For the schemes for super senior citizens, the bank has slashed the interest rate by 5 bps on deposits maturing in 1 year to 7.55 per cent from 7.60 per cent. 

Axis Bank FD rates 

Axis Bank has reduced its fixed deposit interest rate on select tenures by up to 20 basis points. The FD interest rates are effective from May 18, 2023. 

According to the bank’s website, the bank is offering an interest rate of 6.80 per cent from earlier 7.10 per cent for the schemes of 1 year 5 days to less than 13 months. On deposits of 13 months and less than two years, the bank will offer 7.10 per cent from earlier 7.15 per cent. 

Will the FD rates fall further? 

Experts feel that current macroeconomic indicators show that FD interest rates are nearing their peak in the current cycle of interest rate hikes. Due to this, overall interest rates may see some reduction in short- to medium-term deposits. A report from Axis AMC stated: “Rates for the short end of the curve up to 3 years can fall by 20-30 bps as, along with this liquidity surplus, we are also near to the peak of interest rate cycle and can expect cuts in last quarter of this FY.” 

Also read: ICICI Bank, PNB revise basic lending rates, EMIs to be tweaked: Check new loan rates here

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