Tag: RBI Monetary Policy

RBI Monetary Policy: OMO sales announcement a surprise, say experts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The market had not fully considered the impact of the open market operations (OMO) announcement or the potential for such action, said Rajeev Radhakrishnan, CIO-Fixed Income at SBI Mutual Fund reacting to the monetary policy announcements on October 6.

While announcing the bi-monthly monetary policy, Reserve Bank of India (RBI) Governor Shaktikanta Das said they may consider OMO sales to manage liquidity.

OMO refers to the sale or purchase of government securities in the open market by the central bank and therefore, has an impact on yields.

As a result, there was an immediate reaction with yields rising by approximately 7-8 basis points, including swaps. One basis point is one-hundredth of a percentage point.

The yield on the 10-year benchmark 7.18% 2033 bond was at 7.2890% at 10:50 a.m., as against the previous day’s closing of 7.2140%.

Radhakrishnan said the data available until the previous week indicated net sales of around Rs 5,000 crore. Nevertheless, the unexpected threat of an OMO sale contributed to the market’s negative response.

Kaushik Das, Chief Economist at Deutsche Bank, had anticipated some surprises in each policy announcement, and the introduction of OMO sales came as one to the market’s surprise, as it was not widely expected.

Kaushik Das raised the question of whether liquidity absorption could have been achieved through a cash reserve ratio (CRR) hike instead. He noted that the RBI had been reversing the incremental cash reserve ratio (I-CRR), making a CRR hike seem unusual. Therefore, the decision to proceed with OMO sales may have been influenced by these considerations.

The RBI Monetary Policy Committee decided to leave the repo rate unchanged and projected India’s GDP at 6.5% for the fiscal year 2023-24.

Despite the possibility of prolonged high global inflation, Das highlighted the resilience of domestic economic activity driven by robust domestic demand.

The RBI’s projections for consumer price index (CPI) inflation have been adjusted as follows: for the second quarter of this fiscal year, it is now expected to be 6.4%, up from the previous estimate of 6.2%. In the third quarter, the projection stands at 5.6%, down from the previous estimate of 5.7%. Finally, for both the fourth quarter and the first quarter of FY25, CPI inflation is anticipated to be 5.2%.

Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank, stated that it largely aligns with expectations since August.

“Broadly, it is a very-much-in-line-with-expectations policy since August,” she said.

Bhardwaj emphasised that the battle against inflation is ongoing and cautioned against finding comfort in a 5-5.5% inflation rate. She stressed that the target remains at 4%, and until this level is consistently reached, the RBI will remain cautious.

“The fight against inflation is not done with and we are not getting away with just a 5-5.5% inflation reading and draw comfort from that. Clearly, 4% is the target and until that is not achieved on a consistent basis, RBI is not going to lower their guards,” she stated.

While Kotak Mahindra Bank’s inflation forecasts are generally in sync with the RBI’s, Bhardwaj noted a slightly higher estimate of 6.5% for the second quarter, compared to the RBI’s 6.4%, but still believes that achieving 5.4% inflation is feasible overall.

“On inflation forecast, we are broadly in sync but for the second quarter, we are at 6.5% as against RBI’s 6.4% and overall we still see that 5.4% is achievable,” she added.

Also Read | RBI doubles gold loan ceiling for urban cooperative banks to Rs 4 lakh

MD of SBI, CS Setty, said that the policy announcements are in line with expectations. The primary emphasis remains on inflation, with a clear message that the target is 4%, necessitating stricter liquidity management. Banks and financial institutions must prepare for sustained tighter liquidity conditions.

While discussing yield and bond market trends, While discussing personal loans, Ashutosh Khajuria, Chief Mentor at Federal Bank, noted that the governor’s concern primarily revolved around unsecured forms of lending, such as credit cards and consumption loans. Regulatory alerts indicate that the growth in this segment has been substantial.

However, Khajuria pointed out that for Federal Bank, the exposure in this area is relatively modest, accounting for only about 2.5-3% of their total loan portfolio. Therefore, this may not have a significant impact on their operations.

Shanti Ekambaram, a Whole-time Director at Kotak Mahindra Bank, expressed that India has the potential to become the new driving force for economic growth on the domestic front. She emphasized that her concerns primarily revolve around a few key factors, including global instability, the direct impact of oil price increases on inflation in India, the possibility of a worldwide food crisis or scarcity, and any geopolitical tensions that may manifest, possibly affecting currency flows. Ekambaram noted that the current risks primarily originate from the global arena.

According to Pranjul Bhandari, the Chief India Economist at HSBC, it would be unwise to speculate that the Reserve Bank of India (RBI) will start reducing interest rates by mid-2024. Such a prediction would be hasty and unwarranted. Bhandari explains that if India is to achieve the expected rapid economic growth in the short term, it is likely to lead to inflation, especially considering that core inflation tends to increase swiftly when economic growth is robust in India.

Anubhuti Sahay, Head of South Asia Economic Research at Standard Chartered Bank, believes that keeping the current numbers unchanged for December and March 2024 is justified for the short term. However, for FY25, Sahay suggests that these are model-based projections, and as we approach monetary policy decisions around June or September 2024, these numbers can change significantly.

For more details, watch the accompanying video

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RBI doubles gold loan ceiling for urban cooperative banks to Rs 4 lakh

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India on October 6 doubled the ceiling for gold loans for urban cooperative banks (UCBs) under the bullet repayment scheme to Rs 4 lakh.

However, this is applicable only to banks that have met the overall target and sub-targets under the Priority Sector Lending (PSL) as on March 31, 2023,

The bullet repayment scheme lets borrowers repay both the principal and interest amounts on a loan as a lump sum when the loan tenure ends.

RBI first allowed bullet repayment of gold loans up to Rs 1 lakh in 2007. In 2014, the ceiling was doubled to Rs 2 lakhs while restricting the repayment period to 12 months.

UCBs have been seeking an increase in the loan ceiling to help small and marginal borrowers meet their funding requirements.

RBI recently extended the timeline for UCBs to achieve PSL targets by two years to March 31, 2026.

The average ticket size of gold loans for non-banking finance company Manappuram Finance is around Rs 85,847, while for Muthoot Finance it is around Rs 1,22,008.

RBI Governor Shaktikanta Das announced the increase in the loan ceiling after announcing the monetary policy. The six-member Monetary Policy Committee, Das said, unanimously agreed to keep the repo rate unchanged at 6.5%.

The MPC also decided by a 5:1 majority to remain focused on “withdrawal of accommodation,” Das said.

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RBI MPC Meet 2023: Repo rate left unchanged at 6.5%, decision taken unanimously; Inflation a big risk

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India did not hike its lending rate (repo rate), in line with the consensus expectations of market watchers and economists. The repo rate was left unchanged at 6.5%, as announced in the August policy. A CNBC-TV18 poll had expected the Monetary Policy Committee to maintain a status quo.

The decision to keep the rates unchanged was taken unanimously. The Monetary Policy Committee also decided by a 5:1 majority to remain focused on “withdrawal of accommodation.”

The Governor in his speech said that India is focused on macro stability and fundamental growth. He further said that India is poised to become the new growth engine of the world.

“Have identified inflation as a major risk to macroeconomic stability and sustainable growth,” the Governor said.

Explaining the rationale behind keeping interest rates unchanged, the Governor said that the transmission of the 250 basis points rate hike carried out by the Reserve Bank so far remains incomplete.

The RBI has also maintained its growth outlook for the financial year 2024 at 6.5%. The estimates for the upcoming four quarters have also been maintained at the levels announced in the August policy.

Governor Das highlighted headwinds from geo-political tensions, global economic slowdown and uneven monsoon as key risks to the outlook.

Inflation projections for the financial year 2024 were also left unchanged at 5.4%. The RBI expects inflation in the first quarter of financial year 2025 to be at 5.2%.

For the second quarter of the financial year 2024, the inflation projection has been raised to 6.4% from 6.2%, while that for the third quarter has been cut to 5.6% from 5.7% earlier.

“The risks are evenly balanced,” the Governor said.

Minutes of this meeting of the Monetary Policy Committee will be published on October 20, 2023. The next MPC meeting has been scheduled from December 6-8, 2023

Follow all the live updates from the RBI Governor’s Press Conference here.

Also Read: RBI doubles gold loan ceiling for urban cooperative banks to Rs 4 lakh

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RBI Monetary Policy: What experts expect from RBI MPC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The significant surge in US yields and crude oil prices has likely stabilised for now. However, the Monetary Policy announcement on October 6 by the Reserve Bank of India (RBI) and its six-member Monetary Policy Committee (MPC) is expected to be influenced by the market’s recent unpredictability over the past month.

A CNBC-TV18 poll suggests the market unanimously does not expect a change in rates or the stance.

In the last policy announcement made on August 10, Shaktikanta Das, the Governor of the Reserve Bank of India, retained the real GDP forecast of 6.5% for the fiscal year 2024. This was backed by the expectation of robust growth in both rural and urban regions, increased investment activity, and the government’s commitment to boost capital expenditure.

In an interview with CNBC-TV18, Ashhish Vaidya, Head of Markets at DBS Bank India and Suyash Choudhary, Head-Fixed Income at Bandhan MF spoke at length about what the policy conveys; given the recent volatility in US yields will tighten liquidity to keep short-term rates high and what else should one watch out for.

Vaidya said DBS Bank India does not anticipate any alterations in rates in the upcoming RBI policy. His company holds the view that the RBI will maintain tight liquidity, and the focus will be on reducing liquidity levels.

“We are not expecting any change in rates as such, but liquidity is going to be at the center of the policy and they will continue to keep the liquidity tighter,” he said.

Choudhary concurred the emphasis will remain on liquidity. He expects the short-term steps taken by the RBI to address liquidity issues to persist. At this point, he doesn’t believe the RBI would be inclined to raise interest rates.

He added that given the current market dynamics, it is challenging to envision inflation falling below 5%. “It is hard to see inflation below 5% sustainably given the repeated food shocks that the RBI also refers to from time to time, as well as the volatility that you are seeing in the commodity market,” said Choudhary.

For the entire discussion, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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Rising yields: BoFA’s Jayesh Mehta warns of ‘another financial accident’ in US soon

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The recent sell-off in US bonds kept markets across the world on edge. Speaking to CNBC-TV18, Jayesh Mehta, MD & Country Treasurer at Bank of America expressed concerns about the pace of rise in US yields, cautioning that it “could lead to another accident.”

Mehta said, “The way and the speed at which it has happened, so we saw one accident last year, or maybe six months back, and I wouldn’t be surprised if we see something more happening in another six months or so because of the pace, and the way the rates have gone up. So that’s is little bit challenging, we have to be careful. The global macro does not look that good as of right now.”

“Inflation is coming off in the US but don’t expect a cool-off,” he cautioned.

“Even inflation temporarily may be coming off, but then it can sharply bounce off, there is no cool-off. So their economy is actually doing well. So that’s the reality and we cannot ignore it. So from that perspective, it becomes very difficult, globally, because it’s the Big Daddy anyway, so from that perspective, if that is surging, the rest of the people do suffer.”

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Mehta also shared his expectations on the Reserve Bank of India’s monetary policy announcement scheduled for Friday, October 6. He expects RBI to maintain its current policy stance in the near term. “To just go with consensus and I personally also think, no action, no change in stance, no change in rate.”

He said while the US has its own problems, our inflation is quite curtailed because of the dollar strengthening, and maybe to be a little more cautious, RBI may keep liquidity tight.

“Next year is going to be pretty volatile and more than our election, there is also an election in the US so let’s not forget that,” he said, adding, India looks good but if things are not stable globally, it will impact all emerging markets.

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Bad news for emerging markets? Analyst says rising yields to make dollar more attractive

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In an interview with CNBC-TV18, Steven Englander, Global Head of G10 FX Research & North America Macro Strategy at Standard Chartered Bank, extensively discussed the trajectory of US yields. Pranjul Bhandari, the Chief India Economist at HSBC, also shared insights into how global developments could influence the RBI’s policy decisions and its stance on liquidity and interest rates.

The Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) began deliberations on rates today, against the backdrop of a challenging global scenario.

This week, US 10-year yields have surged by 20 basis points, reaching a 16-year peak of 4.84%. Notably, US yields currently stand nearly one percentage point higher than they were when the RBI last convened in August.

Englander said, “If it becomes clear that the US is slowing down; it doesn’t have to fall off the cliff, it could just be a gentle slowdown then selected high-yielding emerging markets will look very attractive, but in the current world especially if you are afraid if US yields are going to continue to go higher, it’s tough to be excited about anything but the dollar.”

Bhandari said the RBI is likely to be highly cautious regarding risks at this juncture. However, she doesn’t anticipate a shift in the central bank’s overall position.

The RBI, she believes, may aim to adopt a more cautious stance, but it’s unlikely there will be alterations in its inflation projections. Nevertheless, she emphasized that keeping an eye on inflation forecasts and liquidity measures will be important factors to watch in the forthcoming RBI policy. Any adjustments to the RBI’s forecasts for both inflation and economic growth are not expected.

“At this point, the RBI will be most risk averse, and will not want to take any challenges or make any new change. So, in terms of what they do on Friday, October 6, my sense is no change in stance, no change in rates. They keep talking about the 4% target to double down on their inflation objectives and make sure people are aware of that that they want to go all the way to 4%,” she said.

While talking about growth, Bhandari said, “Things are very good in urban India as of now and that is what is keeping growth strong right now. Of course, with oil prices rising, some of that could get blunted going forward, but so far growth is extremely strong.”

For the entire discussion, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI Monetary Policy: Experts analyse global economic challenges ahead of MPC meet

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India’s (RBI) Monetary Policy Committee’s (MPC’s) three-day meeting to deliberate on rates begins today in the background of challenging global cues with US yields and crude oil surging.

RBI Governor Shaktikanta Das will announce the monetary policy on October 6.

Ahead of the policy decision, CNBC-TV18’s Citizens’ Monetary Policy Committee discussed issues confronting policymakers.

During the most recent policy announcement on August 10, the Governor of the Reserve Bank of India, Shaktikanta Das, maintained the same real GDP projection of 6.5 percent for the fiscal year 2024. This decision was influenced by the anticipation of elevated growth in both rural and urban areas, heightened investment activity, and the government’s intention to increase capital expenditure.

CNBC-TV18’s Latha Venkatesh spoke to Pronab Sen, Former Chief Statistician; Soumya Kanti Ghosh, Grp Chief Economic Advisor at SBI; Samiran Chakraborty, Chief India Economist at Citibank; Sonal Varma of Nomura, and Sajjid Chinoy, Chief India Economist at JPMorgan,

One of the prominent factors influencing the RBI’s decisions is the rapid rise in US yields. Sajjid Chinoy highlighted the unexpected resilience of the US economy. Contrary to earlier predictions of a slowdown, the US GDP for the third quarter is tracking at an impressive 3.50 percent, well above the first-half figures.

Chinoy emphasised, “This is not just resilience; it’s full-blown strength.” The strength of the US economy is keeping the Federal Reserve cautious, resulting in only modest rate cuts in 2024 and 2025. Consequently, US interest rates have risen significantly, with the 10-year yield nearing 4.5 percent. These developments have far-reaching implications for India’s monetary policy.

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Ghosh expressed his views on India’s inflation outlook. Ghosh believes that the RBI will maintain its focus on controlling Consumer Price Index (CPI) inflation. He stated, “I don’t think the Reserve Bank is going to lower the CPI inflation yet because it needs to keep the pedal firmly on inflation control.” Ghosh acknowledged that the September inflation figure might show a significant drop due to base effects and other factors, but this should not lead to a shift in the RBI’s stance.

Pronab Sen, Former Chief Statistician, raised concerns about liquidity. He noted that there is a prevailing sentiment that liquidity is already in deficit, and the RBI should not exacerbate this perception. However, Sen also acknowledged the complex political landscape with elections on the horizon. He mentioned that while the RBI is independent in its decision-making, it must consider the demands placed upon it in the lead-up to elections. Sen suggested that the RBI should temporarily maintain its current instruments to manage liquidity.

When asked about the MPC’s likely course of action, all participants in the Citizens’ Monetary Policy Committee were of the opinion that the RBI would hold the policy rate steady.

Regarding the stance of the RBI’s monetary policy, the majority believed that the central bank would retain its stance of withdrawing accommodation. However, Pronab Sen differed from the majority, suggesting that the RBI should consider moving to a neutral stance.

Dinesh Kumar Khara, Chairman of SBI expects a pause in rates by the RBI.

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Citizen’s MPC: Tomato inflation may keep RBI MPC a tad hawkish but unchanged on rates and stance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Reserve Bank of India (RBI) governor Shaktikanta Das will announce the Monetary Policy Committee’s (MPC) decision on interest rates, GDP and inflation projections and more on August 10. And this time, tomatoes are likely to hijack the policy discussion.

Ahead of the RBI MPC announcement next week, CNBC-TV18 caught up with Pronab Sen, Former Chief Statistician, Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India, Samiran Chakraborty, Chief Economist-India at Citi, Sonal Varma, MD and Chief Economist-India at Nomura Financial Advisory and Securities and Sajjid Chinoy of JPMorgan for Citizens Monetary Policy Committee’s analysis.

Citizens MPC predicts that the RBI MPC is likely to have a neutral to hawkish stance in August policy with a focus on tomato inflation and global macro uncertainties.

Also Read: A look at June RBI MPC meeting highlights

Pronab Sen explained that the RBI was facing two challenges — vegetable prices and uncertainty around exchange rates.

“The trends indicate that the exchange rates will continue to weaken, which means there will be upward pressure on inflation from the external side, regardless of what is happening to global prices,” he said.

On vegetable prices, he said the central bank needs to focus on the extent of influence that the hikes will have on inflationary expectations in the country.

RBI MPC outlook in June policy

Samiran Chakraborty said that at least across the vegetable basket, the 11 vegetables that are tracked, there has been a significant increase in prices and therefore, it’s generalised vegetable price inflation.

“On a month-by-month basis, the vegetable price inflation could be 35-40 percent as well. Because it’s not showing up as much in onions and potatoes, probably why we’re not discussing it now,” he said.

Chakraborty, however, pointed out that the good news is that beyond vegetables, the rest of the food index is still doing reasonably okay but there could be price pressures.

JPMorgan’s Sajjid Chinoy shed light on the global picture. He said there are three things to watch globally — more resilience, lack of near-term recession prospects and US exceptionalism.

“First half global growth is tracking 2.7 percent above trend. So, resilience is showing up in growth and in labour markets. That has meant that markets have begun to price out in near-term recession, and the rate cuts that come with it,” he said.

Chinoy said there will likely be a sectoral shift, where services may slow, but manufacturing may pick up in the second half of the year. According to him, there’s a restocking cycle underway, tech has bottomed out and final goods consumption is holding up.

Also Read: RBI releases minutes of June MPC 2023 — here are the key takeaways

“The third element is US exceptionalism. We’re seeing Europe is disappointing, and China has disappointed, but the US is holding up. That means a stronger dollar is putting some pressure on emerging market currencies.”

However, Nomura’s Sonal Varma believes that US exceptionalism is unlikely to stand for long. He sees one of two scenarios playing out. “Near term, it does look like disinflation should sustain but over the next six to nine months, we think that lags will play out. The credit standards are tightening so that spill over into business investment and eventually into the labour market. Our view is that US exceptionalism is not going to last for long. From a central bank’s perspective, given the uncertainty central bank needs to be prepared for either of the scenarios.”

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Why Nomura sees FY24 India GDP slip to 5.5% against RBI and Morgan Stanley reading of 6.5%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) on Thursday retained its GDP growth projection for the current financial year at 6.5 percent, citing factors such as higher Rabi crop output, moderating commodity prices, favorable monsoon projections, and the government’s emphasis on increased capital expenditure.

However, economists hold divergent views on India’s growth trajectory. Sonal Varma, MD & Chief Economist-India and Asia ex-Japan at Nomura Financial Advisory & Securities, expresses concerns over global headwinds and India’s elevated interest rates, which have led to a deceleration in growth. Varma predicts a GDP growth of 5.5 percent in FY24.

On the other hand, Upasana Chachra, Chief India Economist at Morgan Stanley, aligns with the RBI’s optimistic outlook, considering India’s 6.5 percent growth rate to be among the fastest in the world.

In an interview with CNBC-TV18, Varma said that the Reserve Bank of India has not excessively tightened its monetary policy but has rather adopted a more normalised approach. However, she highlights a 250-basis point increase in interest rates over the past year, noting that it takes approximately 12 months for these rate hikes to impact economic growth and subsequently inflation.

Varma explains, “The last 12 months reflect the monetary conditions from a year ago, and the impact of last year’s monetary policy normalization coincides with global spillovers. It is this combination that leads us to anticipate a cyclical moderation, bringing growth to around 5.5 percent.”

Meanwhile, Chachra said that Morgan Stanley has a constructive view of the Indian economy. She said, “The primary story for India does remain, the strength in domestic demand will continue. So, growth will sustain closer to the numbers that we saw in the March quarter, and for FY24 we expect growth at 6.2 percent; our number on the calendar year is at 6.5 percent, but in FY25 we do think growth remains above 6 percent.”

However, a day after RBI said India could grow 6.5 percent, the Chief Economic Advisor V Anantha Nageswaran said, “I feel FY24 growth will be close to 6.5-7 percent due to higher investments and digital transformation. We have barely scratched the surface of the digital transformation in India.”

“We need to prepare for the climate change impact; maintain economic growth and make sure we also grow sustainably,” the CEA added.

For more details, watch the accompanying video

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Fixed deposit rate hikes to see a halt soon — Is it time to rejig your investments?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The pause in the repo rate hike, coupled with surplus liquidity in the banking system, may lead bigger banks with adequate deposit mobilisation to halt their fixed deposit (FD) interest rate hikes, experts said after the Reserve Bank of India (RBI) maintained the status quo on Thursday. Before hitting the pause button for the second time, the central bank had raised the repo rate cumulatively by 250 basis points since the beginning of the rate hike cycle in May 2022.

FD rates are influenced by several factors, including the repo rate, the gap between credit growth rates, deposit growth rates, and overall liquidity in the banking system.

While rates have been paused, banks are also experiencing a surplus of liquidity as a result of the submission of Rs 2,000 notes, with a deadline for exchange and deposit set by September 30, 2023, by the general public.

Reiterating this, RBI Governor Shaktikanta Das on Thursday said that Rs 1.8 lakh crore in additional liquidity had entered the system via deposits of Rs 2,000 notes. “If the 85 percent trend holds and all Rs 2,000 notes are returned by September, we will have Rs 3 lakh crore additional liquidity,” Das said while addressing a press conference after announcing the bi-monthly monetary policy.

This influx of funds should lead to a modest decline in fixed deposit rates.

In an earlier conversation with CNBC-TV18.com, Akhil Bhardwaj, Senior Partner at Alpha Capital said there is a lack of credit offtake too which plays a crucial factor here.

This means loans are not being disbursed as anticipated due to higher rates. In such a scenario, banks have limited incentive to attract depositors with high-fixed deposit rates because they are not earning good net margins. As a result, they may choose to reduce these rates to encourage credit growth.

Here’s a look at the current FD rates of key banks

(Source: BankBazaar)

Investment strategy

Depositors can start booking FDs for longer tenures, especially if those are offered at attractive yields, said Naveen Kukreja, Co-Founder & CEO at Paisabazaar.

“Banks having more aggressive targets for their credit growth or those having relatively smaller deposit bases may resort to further FD rate hikes to achieve their targeted credit growth,” he said.

Echoing similar views, Adhil Shetty, CEO at BankBazaar, said individuals should consider reinvesting their FDs now for higher returns.

“Most banks provide rates of 7 percent or more on select deposit tenors. Smaller banks are at 7.5 percent and many small finance banks are above 8 percent. Senior citizens are being offered a premium of 25 to 75 basis points. Some government banks are offering super senior citizens (those above 80) additional premiums. Similarly, the AAA-rated deposit options remain compelling. There are many companies offering 7.75 percent or higher on select tenors. Depositors, especially senior citizens, can use these options to pad up their fixed income returns,” Shetty said.

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