If fixed deposit (FD) is your most preferred investment option, then you should go to the bank immediately without wasting any time since banks are cutting down interest rates on fixed deposits.
Two leading public sector banks, SBI and PNB, have already trimmed their FD rates by 0.25-0.5% on FDs with certain maturities in order to manage the excessive liquidity in the system. Dhanalakshmi bank had also reduced its FD rates by 0.25 to 1 %.
SBI has reduced the rates to 6 % from 6.25% on FDs with maturities over one year. About 5months ago, the bank offered 7 percent on the same deposits. The bank has also reduced the interest on an FD maturing between 181 and 374 days from 5.75% to 5.25%.
In case of PNB, the rates have been changed across FDs with low and high tenures. The rates are same for deposits of ‘180-364 days' and ‘one year to less than two years' at 5.5% and 6.5% respectively.
Paresh Sukhtankar, executive director of HDFC said that banks expected the FDs to be repriced in October from 10% to 6-7% levels.