Even if you save a little from your hard-earned income, it is better to keep
it in savings
than in
short-term fixed deposits (F.D.). The reason being
the interest rate on FD which matures in one month to 45 days is much low
than that of the minimum 3.5% interest rate set for the
savings account. Moreover, in many cases, there is no such provision of interest in short-term deposits.
Interest on short-term fixed deposits
Bank |
Amount Rs. (In Lakhs) |
Term (days) |
Interest Rate (%) |
HDFC |
Less than 15 |
15-29 |
2.25 |
HDFC |
Less than 15 |
30-45 |
3 |
ICICI |
Less than 15 |
7-14 |
- |
ICICI |
Less than 15 |
15-45 |
3.25 |
SBI |
Less than 15 |
15-45 |
3 |
The bankers say that the interest rates on savings account is set by the
government, so no question of any changes made by the banks there, but that is not
the case with the short-term fixed deposits.
Anindya Mitra, VP, Retail Liabilities, HDFC Bank, says "why should we give
more than 3.5% interest on FD's when we can take one day's fund from the
inter-bank call market on 3%."
An official at the SBI says that the banks in the present situation are not
requiring the short-term deposits. He said, they often use these types of
funds in giving short-term bridge loans prior to authorizing actual loan
applied for.
Such typesof deposits were more in demand when the economy was booming.