Be quick to lock into high-yield deposits

BANKS WILL START CUTTING RATES WITHIN DAYS

- SAIKAT NEOGI

WITH RESERVE BANK of India reducing the repo rate by 50 basis points, individuals should lock into high-yield deposits for longer tenures. They should even look at deposits of small finance banks (SFB) that are offering up to 9% and adopt a laddering strategy.

To balance safety with opportunity, a laddering strategy is best now. Individuals should spread their deposits across one-year, two-year, and five-year tenures. That way, part of the portfolio will earn higher rates, while the rest will give reinvestment flexibility later.

Adhil Shetty, CEO, BankBazaar.com, says senior citizens should act quickly as banks will start cutting fixed deposit (FD) rates soon, especially on short-to medium-term buckets. "If you rely on deposits for income, this is the moment to lock into high-premium senior citizen fixed deposits," he says and adds that with inflation trending below 4%, real returns will still remain positive.