A few days after the repo rates have been increased by the RBI (Reserve Bank of India), HDFC Bank has officially hiked the fixed deposit interest rates for diverse maturities. The hike up to 0.6% has come into effect from the 6th of August, 2018, as per reports. The hike in FD rates will also put further pressure on the bank’s lending rates and they may be hiked again. Interest has been increased on term deposits which have maturities varying between 6 months one day to five years.
Deposits for 6-9 months will be earning interest of 6.75% which is more than the earlier rate by around 40 basis points. The rate of interest on FDs between 9 months three days to lower than 1 year has been increased by 60 basis points and it has been hiked by 40 basis points for a year to 7.25%. FDs crossing 2 years 1 days to 5 years will have interest rates hiked by 10 basis points as compared to the earlier rate. The benchmark repo rate or lending rate has been increased by the RBI sometime earlier by 0.25% and stands at 6.5%.
Retail inflation is taken into account by the Monetary Policy Committee (MPC) of the Reserve Bank of India and this increased to 5% in June 2018 on the back of rising fuel price and this was the highest in the last 5 months. The RBI has been tasked with keeping inflation levels at 4% by the Government of India.