How do Fixed Deposit Rates Change Over Time?

fixed deposits

Fixed Deposit (FD) is a popular investment avenue in India. Compared to market-linked instruments, an FD carries lower risks. It gives you reliable returns at predetermined interest rates. Thus, it is highly preferred among risk-averse investors.

But, do you think FDs are risk-free? Absolutely not. They are subject to interest rate risks. FD rates are affected by a multitude of factors.  They change over time due to the following factors:-

Factors Affecting FD Rates

  • Demand and supply of money

During a recession, credit demand will drastically reduce. Companies will downsize. Individuals will postpone consumption. Unemployment will increase. Thus, during an economic downturn, FD rates decrease and vice-versa.

Currently, the Indian economy is in a recessionary phase. Consequently, bank FD rates are low mostly in the range of 4.9% – 6% p.a. Under such circumstances, Bajaj Finance FD is a lucrative option. Bajaj Finance offers high-interest rates of 7% p.a. Your rate of return will be 7.10% p.a. if you apply for an FD online. If you are a senior citizen, you will earn 7.25% p.a.

Thus, this is an investment option you cannot afford to miss.

  • RBI policies

The policies of the apex bank have a significant bearing on FD rates. If the RBI increases repo rates, banks will increase FD rates and vice-versa. Currently, repo and reverse repo rates are at a record low of 4% p.a. and 3.35 p.a. respectively. As of now, RBI does not intend to raise interest rates. So, the low-interest regime will continue in the near-term.

In such a situation, Bajaj Finance FD is recommended. It not only offers attractive returns but also has a unique SDP scheme to manage interest rate risks.

There are 2 types of SDP schemes. They are:-

  • Monthly maturity scheme: Under this scheme, you can make monthly investments. The prevailing market interest rate will be applied to each monthly deposit on the investment date. The maturity date for each deposit will also differ. You can make 6-48 deposits under this plan. 
  • Single maturity scheme: Under this scheme, all your periodic deposits will mature on the same date. The duration of each subsequent deposit goes on reducing. This is an awesome scheme if you wish to build a retirement corpus.
  • Investment duration

Usually, the longer the investment period, the greater will be the FD rate offered. Bajaj Finance FD rate for an investment tenure of 12-23 months is 6.15%, 24-35 months is 6.60%, and 36-60 months is 7%. If you book an FD online you will get 0.1%p.a more. If you are a senior citizen, you will get 0.25% p.a. more. These rates apply to cumulative deposits.

  • Interest pay-out option

The higher the interest pay-out frequency, the lower will be the FD rate offered. Bajaj Finance FD rates on non-cumulative deposits are equally attractive. Check out the below table for relevant rates.

Investment Tenure Non-cumulative
Monthly Quarterly Half-yearly Annually
12-23 months 5.98% 6.01% 6.06% 6.15%
24-35 months 6.41% 6.44% 6.49% 6.60%
36-60 months 6.79% 6.82% 6.88% 7.00%

***(Please note : Additional 0.1% for online FD, additional 0.25% for senior citizens)

  • Principal invested

The higher the principal amount invested, the higher will be the returns. You can open a Bajaj Finance FD with just Rs 25,000 at your disposal. 

You can access the FD interest calculator on the Bajaj Finserv website which will compute your FD returns in advance. You just have to punch in your principal and investment tenor. Within seconds, your return calculations will be displayed. Accordingly, you can go ahead with your investment decision.

Bajaj Finance FD has a wide range of other benefits too. Visit the Bajaj Finserv website for more details. If you are speculating an FD investment today, then go for Bajaj Finance FD right away!

Analyze factors that determine FD rates 

If you examine the fixed deposit interest rates of various financiers, you will notice that factors like FD tenor, customer type, etc. determine the FD rate. A higher FD rate applies to longer tenors.  

Moreover, if you opt for cumulative FDs, the interest will be directly paid at maturity. The interest that the deposit earns after every quarter gets added to the principal during the next interest calculation cycle. This compounds your returns and proves to be beneficial if you lock-in your savings for a longer tenor.

Usually, a higher interest rate is offered to senior citizens. For example, Bajaj FD provides a 0.25% extra interest rate to senior citizens. Also, an additional interest rate of 0.10% is offered if you use an online FD form to invest in an FD. 

A flexible tenor ranging from 12 to 60 months, features like a multi-deposit facility, and high credit ratings provided by CRISIL and ICRA make it one of the best investment options. Also, a loan against FD is provided if you need some funds urgently. It helps you avoid the penalty charges that are levied on withdrawing an FD prematurely.


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