Bank FD vs Post Office TD: Post Office Savings Schemes are competing with Bank FD, see full details here...

Due to the increase in interest rates on Small Savings Schemes 3 consecutive times, Post Office Term Deposits have once again stood in competition with Bank FDs. Under Small Savings Schemes, the post office is getting 6.9 percent interest on 2-year term deposits, which is equal to the rate offered by most banks on deposits with the same maturity period.

The Reserve Bank started the process of increasing the repo rate in May 2022 and since then it has increased from 4 percent to 6.50 percent. The effect of this was that in the second half of the last financial year, banks started paying more interest on retail deposits to raise more finance. As a result, from May 2022 to February 2023, the Weighted Average Domestic Term Deposit Rate (WADTDR) on new deposits of banks increased by 2.22 percent.

In the first half, the emphasis of banks was more on bulk deposits.
At the same time, in the first half of the financial year 2022-23, the emphasis of banks was more on bulk deposits. But in the second half, his priority changed and he focused more on raising retail deposits. The increase in interest rates was a part of this.

The government decides interest rates on small savings schemes
The government increased interest rates for small savings schemes by 0.1-0.3 percent for the October-December quarter, 0.2-1.1 percent for the January-March quarter, and 0.1-0.7 per cent for the April-June 2023 quarter. Before this, the interest rates on Small Savings Schemes had remained unchanged for 9 consecutive quarters. There was no increase in these from the second quarter of the financial year 2020-21 to the second quarter of 2022-23. The government decides the interest rates on small savings schemes.

The Reserve Bank said that the term deposits of banks are now determined competitively as compared to post office term deposit rates. According to the Reserve Bank, the WADTDR on bank retail deposits with a maturity of 1 to 2 years has become 6.9 per cent in February 2023, while it was 5.8 per cent in September 2022 and 5.2 per cent in March 2022.

6.9 percent return on 2 years TD in the post office
After increasing the interest rate on small savings schemes three times in a row, 2-year post office term deposits are now getting 6.9 per cent returns. This rate was 5.5 percent in September 2022.

FD rates of SBI
The country's largest bank SBI is paying 6.8 percent interest on deposits of more than one year and less than two years. At the same time, SBI's interest rate on deposits of more than two years and less than three years is seven percent. Banks have increased their EBLR by up to 2.50 per cent in line with the increase in the repo rate during May, and 2022-March, 2023. During this, the internal standard of loan pricing MCLR increased by 1.40 per cent.