Special fixed deposit schemes: The Pros and Cons

Fixed deposits have become attractive with compelling interest rates for depositors, as some banks offer as high as 8% in special FD schemes

- BIVEKANANDA BISWAS

AFTER staying below 6% for over two years, bank fixed deposit rates have begun to go up, albeit at a much slower pace than the lending rates.

Nonetheless, fixed depositors have something to cheer about, as some banks have started offering as high as 7.75% interest in certain special FD schemes. Many banks have announced special tenor FD schemes with tenure ranging from 600 days to 777 days.

Bandhan Bank is offering 7.5% on a 600-day FD for retail investors with deposit amount up to ₹2 crore. Senior citizens can get 8% under the same scheme.

State-owned Bank of India has launched 'Star Super Triple Seven Fixed Deposit' scheme, under which it is offering 7.25% on a 777-day FD. Senior citizens can get 50 basis points more, or 7.75%, under the same scheme. This is a limited-time offer.

Similarly, Bank of Baroda recently launched the Baroda Tiranga Deposit scheme offering up to 6.85% interest on 444- and 555-day FDs.

The Reserve Bank of India (RBI) has increased the benchmark repo rates by 190 basis points since May this year. While banks have fully passed on the impact of repo rate hike to borrowers, they have been slow in passing on the benefit to depositors.