According to the SBI website, the bank has raised the interest rate on FDs with terms ranging from 211 days to less than a year by 20 basis points to 4.60 percent. For 1 year to less than 2 year, the interest rate offered has been hiked to 5.30 percent from 5.10 percent. And the interest rate has been raised by 15 basis points on 2 years to less than 3 years tenor FDs to 5.35 percent from 5.20 percent.
Latest SBI FD interest rates
Source: SBI website
Senior citizen FD
The rate applicable to all Senior Citizens and SBI Pensioners aged 60 and up will be 0.50 percent more than the rate applicable to resident Indian senior citizens for all tenors.
Senior citizens will earn 5.10 percent for terms ranging from 211 days to less than a year. The bank will offer 5.80 percent on 1 year to less than 2 year tenors. For 2 years to less than 3 years it will offer 5.85 percent after the hike.
Banks offering highest interest rates on 2-year senior citizen FDs
RBI hikes repo rate
The repo rate has now been raised by 0.50 percent by the RBI during its monetary policy meeting on June 8, 2022, bringing the total hike to 0.9 percent in just 36 days. It obviously indicates that the best days are now here for fixed deposit (FD) investors, who have seen FD interest rates fall by 40% over the last six years, from the peak level of 9% offered by SBI in September 2014 to 5.4 percent in May 2020.
The suggested interest rates will apply to new deposits as well as renewals of maturing deposits. The interest rates on retail deposits and NRO deposits under the “SBI Tax Savings Scheme 2006(SBITSS)” would be linked with the projected rates for domestic retail term deposits.
SBI had last increased FD interest rates in February 2022. With effect from February 15, 2022, SBI had hiked interest rates for FD terms longer than two years by 10-15 basis points.
Good news for FD investors
The Reserve Bank of India (RBI) hiked the repo rates by 50 basis points in its monetary policy meet on June 8, 2022. That brings the total rate hike by the central bank to 90 bps in a little more than a month. More banks are expected to hike FD rates in the coming months, which is good news for FD investors.
These banks offer highest interest rates on 5-year FDs
What is an FD?
A fixed deposit, often known as an FD, is a type of investment instrument offered by banks and non-banking financial institutions (NBFCs). You invest for a certain period of time and receive a fixed interest rate with FDs also, you will receive fixed returns regardless of how interest rates fluctuate or how the economy performs at the time of investing.
How to tweak your FD ladder in the current situation
Making an FD ladder is an option as it helps you to break a big deposit into many parts and book each part after a time gap so that you get the average return and periodic liquidity when there is volatility in the interest rate. However, choosing the right tenure and frequency of deposit is important. In a rising rate scenario keeping the tenure and gap between deposits low is the key so that the deposit gets the benefit of growing rates quickly at the time of maturity. These can be gradually increased to complete a stable ladder.
For instance, if you have Rs 10 lakh you can make the first FD of Rs 2.5 lakh for six months, then a second FD of Rs 2.5 lakh for 9 months and so on. Once your first FD matures you can increase the tenure to 2 years and after that once the second FD matures you can keep the tenure 2 years 3 months and so on. Once these FDs start maturing you increase the tenure to 3 years and increase the gap between the two FDs to 9 months.
Create an FD ladder to maximise returns from rising interest rates