Following the call on the repo rate, experts predicted that although the longer-term rates may stay unchanged, the short-term fixed deposit schemes may witness an increase in interest rates.

The CEO of Bankbazaar.com, Adhil Shetty, explained the potential pricing revision by saying, "We're seeing a consumer mindset shift." The consumer is shifting from a mindset focused on saving to one focused on investing. As a result of this change, a growing number of customers are starting with mutual funds directly rather than savings solutions like deposits. Bank liquidity is becoming more restricted as a result of this, as numerous business executives have recently noted. It follows that demand for short-term deposits is anticipated to be strong, with 1-year rates trending upward and longer-term rates maybe staying unchanged. These temporary rate increases are available to consumers, particularly older folks, who can benefit from higher interest rates.

Financial institutions, banks, and NBFCs consider a wide range of other factors in addition to the repo rates when determining their FD interest rates. Lenders may raise short-term FD rates to draw deposits for funding credit growth if their loan-to-deposit ratios are high. Bank FD rates are influenced by a number of factors, including competition, liquidity, and market conditions.

In an effort to achieve their objectives for credit expansion, banks are also attempting to mobilise retail deposits. A number of lenders have already increased their fixed-rate loans (FD) rates in February, primarily for 200- to 300-day plans. Axis Bank, Punjab National Bank, HDFC Bank, and IndusInd Bank are the four banks that have raised the rates on short-term fixed deposits (FDs) this month.

Ashwini Kumar Tewari, Managing Director of State Bank of India, told CNBC TV 18 that deposit rates have been rising since, over the last few quarters, the rate of loan growth has outpaced the rate of deposit growth. The pressure on deposit accumulation and related rates has increased due to the rise in loan growth and money streaming into mutual funds and equity markets. But this has less to do with monetary policy and more to do with consumer demand for loans and other accessible alternative investments. Deposit rates may still rise, according to Tewari.

FD Scheme Investment

FD laddering turns out to be a clever strategy for maximizing average savings returns. This guarantees that a certain percentage of your money matures each year. You can choose to renew the FD or take the money out when it matures. You can reinvest the matured FD sum at current interest rates in the event of low inflation. On the other hand, if interest rates increase, you will benefit from the larger amounts. When you use this method instead of sticking with a single low-rate FD for a long time, you can earn higher average returns. Currently, a number of top banks are providing 3-year fixed-rate certificates with interest rates more than 7%. A one-lakh investment in this kind of programme could result in substantial profits.