Bank FD: Investing in bank FD is not beneficial, getting negative returns!

In India, generations after generations, people have invested money in a bank fixed deposit (FD) as the safest investment instrument. They have also been getting reasonable returns without any risk on it. Banks have been continuously reducing interest rates on FDs for some time now. Due to this rising inflation is getting negative return on FD.



new Delhi. Already, interest rates are being reduced on bank deposits before the Corona crisis. With this, the profits of investors on all types of bank deposits including FDs are getting reduced. Even the rising returns from the bank deposits to the common investor have become negative returns due to rising inflation. At present, investors are getting 5-7 per cent annual returns on bank fixed deposits (FD), which was 8-10 per cent annually till a few years ago.

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Current interest rates on FD are no longer viable
In India, generations after generations, people have invested money in a bank fixed deposit (FD) as the safest investment instrument. They have also been getting reasonable returns without any risk on it. Jimmy Patel, MD and CEO of Quantum Mutual Fund, said that most senior citizens of the country consider investing in FDs the safest. They say that there is no risk on the investment made in FD and returns are also good. However, things have changed now. In fact, given the real profits, the current rates on FD are no longer practical.



Monetary policy is also responsible for negative returns

In recent months, the level of inflation has remained above 6 percent. Consumer inflation was around 7 percent in July due to disruptions in the supply chain. At the same time, the inflation rate for food and drink reached 9.6 percent. At the same time, the rate of interest on most deposits is running below 6 percent. The actual return on their savings to investors has become negative based on the interest earned on bank deposits against inflation. For this, the monetary policy of the Reserve Bank of India (RBI) can also be held responsible to some extent.



‘Rates on bank deposits can go down from 3%’ The
central bank has cut rates by 250 basis points or 2.50% since February 2019. The maximum reduction in this has been done during the Kovid-19 lockdown. Also, a lot of capital infusion was done in Indian banks. This forced banks to cut interest rates on fixed deposits. Even the interest on savings account has been drastically reduced. Punjab National Bank (PNB) MD SS Mallikarjun Rao said that the savings rate can go below 3 per cent, which is a big warning for the common people.



the bank over the golden era of fixed deposits’
Union Bank of India (UBI), managing director and CEO Rajkirn opinion returns on that bank deposits by then It will not be beneficial for the people, unless the rate of inflation reaches 2 percent. He said that the golden phase of bank FD is over. A large number of investors are looking for other options. Amitabh Chaudhary, MD and CEO of Axis Bank, said that now 10% interest rate will never be seen on bank deposits. I think now the current rates of bank deposits will become normal.

The post Bank FD: Investing in bank FD is not beneficial, getting negative returns! appeared first on informalnewz.



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