In its first monetary policy decision after the Union Budget 2023, the Reserve Bank of India (RBI) has hiked the repo rate by 25 basis points. This is good news for fixed deposit investors as soon banks will start passing on the benefits to the customers in terms of hike in deposit rates.
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Four out of six members of Monetary Policy Committee (MPC) have decided to go ahead with this hike in the repo rate, RBI Governor Shaktikanta Das said. RBI started its three-day meeting on February 6 amid the rate hiking spree that began in May last year with the aim to keep inflation in check
What will change?
With the raising of key benchmark interest rate by 25 basis points to 6.5 per cent, there will be a direct impact on both bank depositors and new loan borrowers. As repo rate rises, banks increase the interest rate on their consumer loans.
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What are the current rates?
Currently, top banks, such as State Bank of India (SBI), Axis bank, HDFC, ICICI and Kotak Bank, offer an interest rate in the range of 3% – 6.35%. For two years FD, the interest rate of SBI FDs is 6.75%, Axis bank FDs is 7.26%, HDFC bank FDs is 7%, ICICI bank FDs is 7%, and Kotak bank FDs is 6.75%. IDFC First Bank and IndusInd Bank offer interest rates at 7.5% for 2 years FD.