The changing face of savings and investment in India

Debt is no longer considered to be bad, as it helps foment consumption. Ideally, a balance needs to be drawn but it must come from within

- MADAN SABNAVIS

A conundrum for any individual is where to save or invest money. 2025 has been a year of volatility, which started right from the time Donald Trump took over as president. His stance was quite singular: Make America Great Again. The issue of tariffs attained several dimensions of being increased for some countries and decreased for others. There has been a relentless pressure put on the Fed to lower interest rates, which finally did materialise even though economic theory would raise a red flag. There have been reverberations in India on the market, and there is a nervous unease when one looks at the stock market.

Let us start with India. Since February, the RBI stance has been clear, and the repo rate has come down by 100 bps. This is a critical indicator for banks, as a lower repo rate gets translated to lower lending rates on approximately 60% of loans. This also forces banks to lower their deposit rates to maintain their interest margins. Hence, deposit rates for savers have climbed downwards this financial year by a little more than 100 bps.

The interest rate on a deposit has come down from close to 8% for, say, a year to even less than 7% for most tenures. Savers must take a call on their options when it comes to deploying their funds.