Rates on deposits less than 5 crore lowered by Allahabad bank

Allahabad Bank has reduced the interest rates on fixed deposit accounts amounting up to 5 crore and if it is being deposited for duration between one to two years.

Following the footsteps of Bank of India, another public sector bank which has reduced its interest rates by 0.25 per cent, Allahabad bank cuts rates by 25 basis points to 9.25%. Senior citizens will be provided benefit of 50 basis points on interest rates.

The new rates are effective on fresh deposits and those which are renewed.

Utilize fixed deposits for short term financing

Are you in immediate need of funds and wondering what all options you have? There are a lot of  options available, one can consider personal loans or loans against national savings certificate, loans against insurance policy or loans against fixed deposits.

The loan against FD being a secured loan is offered at less interest rate viz-a-viz a personal loan. Banks offer as much as 90% of loans of the value of the fixed deposit. The interest charged is at around 2-2.5% above base rate against 3-3.5% and above for personal loans.

Therefore in case of urgency it is advised to pledge your fixed deposits for taking a loan. Another benefit of taking such a loan is that in case of default, the bank would recover the amount from the fixed deposit and the borrower and his family would not be under the pressure of repayment.  

Cut in Fixed Deposits rate by SBI

SBI, one of the country’s largest lender banks, has reduced rates on selected maturities prior to the review meeting of RBI on monetary policies scheduled on June18.

The bank has decided to revise its retail term deposit interest rates with a reduction of 0.25% in tenure up to 240 days, SBI said in a statement.

The Interest rate may come down to 7% from existing 7.25% on 7-179 days of fixed deposits. SBI has base rate or minimum lending rate of 10%. These were last revised by Bank in April where the rate was slashed about 1% on fixed deposits as a consequence of RBI’s decision to reduce the key interest rate by 0.5% up to 8% in its annual credit policy.

Even RBI Deputy Governor Subir Gokarn had said that there is a room to ease policy stance in the light of moderating growth and falling crude oil prices.

Fixed Maturity Plans getting more popular

The time-tested investment vehicle of Fixed Maturity Plans (FMP) is now, attracting investors due to slowdown in economy and it seems the economic depression will continue.

Investors find it a good opportunity to lock the money for particular period at prevailing interest rates as the rates are being expected to lower down. RBI will review its monetary policies on June 18 and discuss with the experts about the rate cuts.

"We now expect 25 basis points repo rate cut on 18 June," says Sonal Verma, India economist, Nomura, in her research note.

The term of maturity in FMPs vary from 90 days to one year and keep the investors safe from any interest rate risk. Infact, the spike in the interest rate offer high returns at the maturity.

Currently 15 FMPs are available in the market from fund houses like HDFC, Birla Sunlife and L&T etc.

V-Vriddhi deposit scheme by Vijaya Bank

VijayaBank has started a 100 day campaign on June 1that will end on September 8. Bank has launched a new scheme, named as V-Vriddhi term deposit scheme which is a 400 day fixed deposit scheme providing interest rate of 9.75% per annum.

It has also offered a V-Vriddhi Recurring Deposit Scheme with higher rate of interest at fixed maturity period.

Apart from these, the processing fees in home loans and vehicle loans are waived off. Home loan starts at 10.55% and the vehicle loan at 11.20%. The vehicle loan borrowers will enjoy concession of 10- basis points and home loans buyers can avail concession of 20- basis points.

Also, the campaign will offer a savings bank product with many benefits. Such a campaign will help the bank to acquire more customers and enhance its retail business.