Winning Bizness Desk

Mumbai. Most possibly, interest rates on Fixed Deposits are likely to increase as bank loan demand has hit a nine-year high, but deposits are not growing at the same pace. This trend has resulted in shortage of funds with the banks and therefore, in such a situation, the interest rates of deposits are believed to increase. According to sources, the deposit rates can be increased by 1.75-2.25% within a year.

4.8% more than the loan disbursed

According to the latest data of the Reserve Bank, in the current financial year starting from April 1, till August 26, banks have disbursed loans worth Rs 5.66 lakh crore. This is 4.8% more than the loan disbursed in the same period of the previous financial year. There was a 0.5% decline in this case since August last year. Not only this, this is 15.5% more than the loan disbursed till 26 August in the calendar year 2021. This is the highest figure for loan disbursement since November 1, 2013.

Repo rate Vs Deposit rates

* The gap between repo and deposit rates is gradually narrowing. It was 0.80-1.0% in July. Now it has come down to 0.6-0.8%.

* Deposit rate increased by 0.30-0.60% in the current financial year till August. During this, the repo rate increased by 1.40% to 5.4%.

* Yes Bank, Axis Bank, Bank of Baroda, ICICI Bank and Union Bank hiked FD rates by 0.30-0.50% in recent weeks.

Deposit rate should increase rapidly in 6-9 months

Three-year FD rates are moving towards the 2018 level of 7.25-8.5% from 5.5-6.25% at present. “If banks increase the loan rate in line with the increase in the repo rate, then in the next 6-9 months, the deposit rate should increase rapidly,” said a banker.

Repo rate may increase by 0.75% by March 2023

Banks believe that by March 2023, the repo rate may increase by another 0.75%. After this, the repo rate cut is expected to start. “There should be a sharp hike in the deposit rate from January next year,” said a private banker.