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Archives - Ratekhoj.com, Indian Personal Finance Trends and News | Ratekhoj.com, Best Fixed Deposits, Loans, Insurance Rates and Credit Cards

Many banks in India have raised the interest rates for Non Resident External (NRE) and Foreign Currency Non Resident (FCNR) fixed deposit accounts effective from November 17, 2008. NRE accounts are rupee denominated accounts that can be opened by Non Resident Indians and have fixed deposit terms ranging from 1 year to 5 years. FCNR accounts can be opened by Non Resident Indians and are denominated in 6 different foreign currencies - US Dollars, Canadian Dollars, Euros, Sterling Pounds, Australian Dollars and Japanese Yen.

NRE term deposits for a period of 1 year to 2 years will now yield 4.92%, while those for a term of 2-3 years will yield 4.41%. NRE deposits for a period of 3 years upto 5 years will now give an interest of 4.89%.

FCNR accounts denominated in US dollars will yield 4.17% for a term of 1 to 2 years, 3.66% for a term of 2 years to 3 years,  4.14% for a term of 3 years to 4 years, 4.49% for a term of 4 years to less than 5 years and 4.76% for a term of 5 years. The table given below gives the complete table of FCNR interest rates:

                   US$ Euro GBP CAN$ AUD YEN
1 year to less than 2 years 4.17 5.87 7.01 4.17 7.28 2.16
2 years to less than 3 years 3.66 4.59 5.18 3.26 6.14 1.87
3 years to less than 4 years 4.14 4.70 5.32 3.52 6.44 1.94
4 years to less than 5 years 4.49 4.81 5.42 3.70 6.66 2.05
5 years 4.76 4.91 5.51 3.89 6.72 2.15

 

Most banks offering FCNR and NRE accounts in India have announced this increase in interest rates including State Bank of India, Syndicate Bank, Allahabad Bank, Bank of Baroda, Corporation Bank and State Bank of Mysore.

There have been a number of announcements by banks in India recently that they would be cutting their fixed deposit rates in December. The latest bank to make a similar announcement is Corporation bank, a public sector bank. As reported in Livemint.com:

Corporation Bank said that it would cut deposit rates by 50 basis points across all maturities beginning next month.

“We have decided to slash term deposit rates by 0.5%,” the newly appointed Chairman and Managing Director of Corporation Bank J M Garg said.

“Following the reduction, the peak rate would come down to 10%,” he said.
The bank has already reduced the benchmark lending rate by 75 basis points beginning this week. The Prime Lending Rate of the bank has been revised downwards to 13.25% from earlier level of 14%.

Largest public sector bank, State Bank of India, has already announced new fixed deposit rates that would be effective from December 1. As reported by Ratekhoj earlier:

State Bank of India, India’s largest public sector bank, has announced a reduction in its fixed deposit rates that will take effect from December 1, 2008. The cuts in the fixed deposit rates range from 25bps (0.25%) to 50bps (0.50%) for terms between 91 days and 10 years. This reduction in fixed deposit rates follows cuts in interest rates on loans by several banks in India recently.State Bank of India has reduced its interest rate for the deposit period of 91 days to 180 days from 7.50% to 7.00%. Rates for a term of 181 days to less than 1 year have gone down from 8.50% to 8.00, while the rates for a term of 1 year to less than 2 years have gone down from 10.00% to 9.50%. Rate for a term of 2 years to less than 1000 days will be 9.00% reduced from 9.50% and fixed deposit rate for a term of 1000 days will be 10.00% from 10.50%. The interest rate for a fixed deposit with a term of 1001 days to less than 3 years will be 9.00% reduced from 9.50%. Fixed deposits with a term of 3 years to less than 5 years will now yield 9.25% down from 9.75% and those with a maturity of over 5 years upto 10 years will be 9.00% which is down 25bps from before (9.25%).

Another bank that has already announced cuts in its fixed deposit rates from December 1 is Canara Bank which is also a public sector bank. As reported in The Economic Times, a Canara Bank official announced cuts in its FD rates:

The interest rates on deposits of 500 days to two years has been scaled down from 10.5 per cent to 10 per cent with effect from December 1, 2008, the official said.

Other public sector banks have announced impending cuts in their fixed deposit interest rates as reported in The Telegraph on November 5:

Banks are slashing their deposit rates even as they trim their lending rates.

Potential depositors may have a small two-week window within which they can still plonk down their surplus cash in fixed deposits and continue to earn interest at existing rates of around 10.5 per cent.

On Wednesday, four public sector banks — the Bank of India (BoI), the United Bank of India, Syndicate Bank and Canara Bank — indicated that they intended to cut their deposit rates by 50 basis points, or half a percentage point.

Canara Bank and the BoI said the deposit rate cut would be effective from December 1.

The United Bank of India’s executive director T.M. Bhasin said the bank would slash its peak deposit rate, which is 10.60 per cent at present, by the second week of this month.

“We had increased the deposit rate to 10.60 per cent from 10.50 per cent from the start of this month. We want to give our customers some time to deposit their money in the scheme before we close it or reduce the rate,” Bhasin said.

Banking mavens said Syndicate Bank would also cut its deposit rates by the end of the month. “Banks will stop giving a 10 per cent plus rate on deposits after the first week of December,” George Joseph, chairman of Syndicate Bank, said on the sidelines of a seminar organised in Calcutta by the Confederation of Indian Industry.

“Deposit rates will have to come down if banks reduce lending rates,” Joseph said.

Sources said the BoI had not yet decided on the maturity tenures that would be impacted by the rate rollback. It was only recently that the bank had raised the deposit rates by 25 to 50 basis points on certain maturities.

It’s clear that these pre-announcements of cuts will help the public take advantage of the higher fixed deposit rates before the interest rates start going down. Fixed deposit rates are at their highest in recent months with DBS Bank currently offering the highest FD interest rate of 11.25% (11.75% for senior citizens) for a term of 1 to 2 years among all banks in India. Among public sector banks, State Bank of Bikaner and State Bank of Hyderabad are offering the highest interest rate of 10.75% for fixed deposits. In the past, banks have simply announced rate cuts without informing the public in advance.

These pre-announcements may also help banks mop up fixed deposit investments from the public who may want to take advantage of the higher rates being offered currently.

November 12, 2008, Ratekhoj.com. State Bank of India, India’s largest public sector bank, has cut interest rates on car loans by 75 bps or 0.75% effective from November 10, 2008. This cut in car loan rates applies to both new as well as used vehicles. Car loans are offered only in the floating rate category by State Bank of India.

Interest rates on loans for purchase of new cars with a loan period of less than 3 years and a loan amount of Rs. 7.5 lacs & above is now 11.75%. Interest rate for purchase of new cars with a loan period of less than 3 years and a loan amount of less than Rs. 7.5 lacs is 12.00%.

For loan period of 3 to 5 years, the interest rate is 12.00% for all loan amounts for new cars. The interest rate is 12.25% for a loan period of 5 to 7 years for new cars and all loan amounts. State Bank of India does not offer car loans for a loan period of more than 7 years.

For used cars, State Bank of India is offering an interest rate of 15.50% for loan period of upto 3 years and 15.75% for loan period of above 3 years and upto 7 years. These rates apply to all car loan amounts.

This cut in car loan rate is based on a cut in State Bank of India’s Bank Prime Lending Rate (BPLR) announced earlier. State Bank of India has also announed a cut in its fixed deposit interest rates effective from December 1, 2008.

November 11, 2008, Ratekhoj.com. State Bank of India, India’s largest public sector bank, has announced a reduction in its fixed deposit rates that will take effect from December 1, 2008. The cuts in the fixed deposit rates range from 25bps (0.25%) to 50bps (0.50%) for terms between 91 days and 10 years. This reduction in fixed deposit rates follows cuts in interest rates on loans by several banks in India recently.

State Bank of India has reduced its interest rate for the deposit period of 91 days to 180 days from 7.50% to 7.00%. Rates for a term of 181 days to less than 1 year have gone down from 8.50% to 8.00, while the rates for a term of 1 year to less than 2 years have gone down from 10.00% to 9.50%. Rate for a term of 2 years to less than 1000 days will be 9.00% reduced from 9.50% and fixed deposit rate for a term of 1000 days will be 10.00% from 10.50%. The interest rate for a fixed deposit with a term of 1001 days to less than 3 years will be 9.00% reduced from 9.50%. Fixed deposits with a term of 3 years to less than 5 years will now yield 9.25% down from 9.75% and those with a maturity of over 5 years upto 10 years will be 9.00% which is down 25bps from before (9.25%).

The rates quoted above are for fixed deposit amounts below Rs. 15 lacs. Fixed deposit investors have a chance to take advantage of the existing higher fixed deposit rates before the rates change on December 1. Other public sector banks are also expected to cut their fixed deposit interest rates in the next several weeks. Recent cuts by Reserve Bank of India to the key Cash Reserve Ratio (CRR) and short term lending (repo) rates are geared towarding a reduction in the interest rates for loans to spur growth in the economy. Banks are following up the reduction in loan rates with a cut in the interest rates for fixed deposits. An early announcement of the cuts in the fixed deposit rates gives people an opportunity to plan their fixed deposit investments before December 1.

November 11, 2008, Ratekhoj.com. ICICI Bank, a private sector bank operating in India, is now offering the highest interest rate for NRO fixed deposits among all the banks in India. ICICI Bank is offering the highest fixed deposit rate of 11.50% for several terms between 1 and 2 years for fixed deposit amounts above Rs. 15 lacs. These NRO fixed deposit terms include 1 year to 389 days, 390 days, 391 days upto 589 days, 590 days and 591 days upto 2 years.

The next highest interest rate for NRO fixed deposits of 11.25% is offered by DBS Bank for a fixed deposit term of 1 to 2 years. This is also the highest interest rate being offered for fixed deposit amounts below Rs. 15 lacs.

There are several banks offering an interest rate of 11.00% for NRO fixed deposits currently. They include Axis Bank, IndusInd Bank, ING Vysya Bank, Karur Vysya Bank and Tamilnad Mercantile Bank. This rate is being offered for various fixed deposit terms between 1 year and 1000 days.

Analysis of NRO top 20 fixed deposit interest rates at Ratekhoj.com shows that NRO fixed deposit rates are at their highest in recent years. However with several banks announcing fixed deposit rate cuts in the next several weeks, it’s likely that NRO rates will also come down. It maybe a good time to lock in the high NRO fixed deposit rates being offered now.

November 9, 2008, Ratekhoj.com. IDBI Bank, a public sector bank in India, has announced in a press release that it is cutting its Bank Prime Lending Rate (BPLR) from 14.25% to 13.50% with effect from November 08, 2008. The bank announced that this reduction in BPLR will reduce its housing and education loan rates effective immediately.

This reduction in BPLR and loan rates by IDBI joins a growing list of public and private sector banks that have reduced their lending rates recently. These banks include Allahabad Bank, Bank of Baroda, Bank of India, Central Bank of India, Dena Bank, Punjab National Bank, State Bank of India, State Bank of Travancore, United Bank of India and Union Bank of India. Loans including home loans, car loans and educational loans are expected to become cheaper as we result of these cuts.

The cuts in the BPLR are a result of the Reserve Bank of India cutting its cash reserve ratio (CRR) and repo rates. These moves aimed at increasing liquidity in the credit markets and loosening the credit for borrowers has had the desired effect with both public and private sector banks cutting their lending rates.

These cuts are a boon to existing and new home loan borrowers in India. Home loans linked to a bank’s prime lending rates (typically floating rate home loans) will go down as a result of these cuts.

November 7, 2008, Ratekhoj.com. Dena Bank, a public sector bank in India, has announced in a press release that it is cutting its Bank Prime Lending Rate (BPLR) from 14.25% to 13.50% with effect from November 10, 2008. This is expected to trigger a reduction in interest rates on loans linked to the BPLR such as floating rate home loans, car loans etc.

November 7, 2008, Ratekhoj.com. Central Bank of India, a public sector bank in India, has announced in a press release that it has reduced its housing loan interest rates by 0.5% with effect from November 10, 2008.

Interest rates on housing loans up to Rs.30.00 lacs stands reduced from 9.50% to 9.00% for loans up to 5 years; from 10.00% to 9.50% for over 5 years to 10 years and from 10.50% to 10.00% for loans repayable in 10 years & above.
 
For loans of above Rs.30 lacs, the rates stands reduced from 10.75% to 10.25% up to 5 years; from 11.25% to 10.75% for over 5 years up to 10 years; and from 11.75% to 11.25% on loans repayable in 10 years & above. 
 
Interest rates on loans under fixed category remain unchanged.

November 2, 2008, Ratekhoj.com. United Bank of India, a public sector bank in India, has announced through a press release that it has raised its fixed deposit interest rates by 100bps or 1.00% for various maturity periods, effective from November 1, 2008.

For the maturity period of 2 years to less than 3 years, the hike is to the extent of 100bps and the interest rate stands at 10.50%. For a deposit period of 1 year to less than 2 years, the new interest rate for fixed deposits is also 10.50%.

Senior citizens earn an interest rate of 11.00% for a deposit period between 1 and 3 years.

Similarly, a 1% hike in the interest rate has been made for fixed deposits with terms from 30 days to 90 days (new interest rate is 7%) and 91days to 179 days(new interest rate is 8%).

The interest rates payable for a deposit period of 3 years to less than 5 years is now 9.75% and that for 5 years & above is 9.25%. Senior Citizens will earn an additional 0.50% more for these periods.

November 6, 2008, Ratekhoj.com. United Bank of India, a public sector bank in India, has announced in a press release that it has decided to pass on the benefits of 25 bps (0.25%) cut in lending rate to all advances linked with PLR with effect from 3rd November, 2008. This will be applicable to Education loans, Housing Loans, Car Loans, SMEs and all other loans.

The reduced lending rate will be applicable for existing Loan Accounts also.

The bank also announded that further cut in the rate of interest on advances will be considered commensurate with decrease in the rate of deposits in the next week.

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