This is how people living abroad can change 2000 note
The era of rising fixed deposit interest rates may end soon. The reason behind this is being told to be out of currency notes of 2000 rupees. According to experts, at present, FD rates are at their peak. At the same time, the liquidity crisis of the banks has also ended. In such a situation, banks may soon decide to cut FD interest rates. Let us tell you that at present the repo rate of RBI is 6.50 percent and from May 2022 to February 2023, it has seen an increase of 2.50 percent. The way the banks have increased the interest rates of home loans and personal loans, in the same way, there has been an increase in the FD rate as well. Let us also tell you what kind of steps can be taken by the banks regarding the FD rate in the near future.
The reason for paying more interest is ending
When the demand for loan is high with banks, then to fulfill it, banks have to face cash problems. Because of which banks lure people with more interest on fixed deposits so that more and more customers deposit money in banks. If you want to assess the liquidity of any bank, then it is important to look at the overnight call money rate used for providing interbank loans. Rates have increased for several months.
It was at 6.90% on March 29 and April 27 this year. After that, on May 6 and again on May 12, the level of high of 7 percent was caught. After May mid i.e. on May 19 this rate came down to 6.45 per cent. When it was announced that Rs 2000 notes were being withdrawn from circulation. Since then, the overnight call money rate has been in the range of 6.45 per cent to 6.55 per cent. Which repo rate is around 6.50 percent. Which is proof that the liquidity problem of banks is reducing.
Banks will now get more deposits
As soon as the accumulation of 2000 rupee notes starts in the banks, there will be an increase in the deposits of the banks. Speaking to ET, Madhavi Arora, Economist, MK Global Financial Services, said that after the decision to withdraw the Rs 2000 note, bank deposits will increase and there will be a jump in liquidity. According to RBL Bank economist Achala Jethmalani, if half of this money remains with the banks for one year, then they will not be in any hurry to increase the interest rates on fixed deposits. At the same time, banks can have deposits of Rs 1.5-1.6 lakh crore in the form of Rs 2000.
In a note from Axis AMC, it has been said that a large part of the notes coming to the banks will remain with them for more than a year. By September, there is a possibility of deposits up to Rs 3 lakh crore in banks, due to which the problem of liquidity of banks will end. It has been said in the note that this liquidity will end in the next one year. Also expect the withdrawal of liquidity to end in the next 3-4 quarters. In such a situation, an increase of Rs 1.5-2 lakh crore can be seen in the liquidity of banks.
no change in coming months
The US Federal Reserve decided to raise interest rates by 25 basis points to between 5.0% and 5.25%. However, according to the monthly report by ICICI Direct, the Federal Reserve has indicated that interest rates may be on hold for now given the credit and other economic risks. Yields have seen a decline after the rate hike as the market expects a rate cut by the end of the year.
Retail inflation has also come down, due to which there has been an increase in interest rates. Retail inflation has been below 6 per cent for the last two months. This figure was 5.66 percent in March and came down to 4.7 percent in the month of April. The ICICI Direct report states that the RBI has put the rate hike on hold. Because of which the 10-year government security rate, which was 7.31 per cent on 3 April, has come down to 7.01 per cent on 29 May. Which can stay at 6.90-7.30 percent in a few months.
The interest rates of these FDs may come down
RBI’s action on Rs 2000 note has indicated to reduce the interest rate. According to experts, an increase in liquidity can be seen in the coming days. Because of which softening can be seen in the interest rates of fixed deposits. Experts say that there can be a fall in the interest rates of short and mid term deposits, which can remain up to 0.20-0.30 percent. Apart from this, overall reduction can be seen at the end of the year.
