FD Recap 2023

Rollercoaster Ride for FDs

2023 has been a year of twists and turns for Indians seeking stability in FDs. Let's go over the highlights to find out.

RBI Hiking Repo Rate

Unlike the subdued rates in 2022, FD rates saw a significant upward climb in 2023, driven by the RBI's repo rate hike by 25 basis points. 

Commercial Banks Hike FD Rates

Scheduled commercial banks increased their FD rates by 0.5-1.5 basis points, with some offering > 7% rates for longer tenures.

Early Promise by SFBs

The year began with rising inflation and SFBs offering competitively high FD rates- some surpassing 9%. Thus attracting more investors by offering better returns than traditional banks.

Unity Small Finance Bank led the pack with a staggering 9% p.a. for tenures between 1 to 3 years.

Unity Small Finance  Bank Offering >9%  Interest Rate 

RBI Hikes Repo Rates Again

Diwali brought an unexpected turn. The RBI hiked repo rates – the rate at which RBI lends to commercial banks – in an attempt to curb inflation.

The Climb Slows Down

This gradually prompted SFBs to reduce their FD rates. By Nov, rates had cooled, with some SFBs offering around 8.5% p.a. for similar tenures.

FDs are Still a Sweet Spot

Despite the dip, SFBs continue to offer some of the most attractive FD rates compared to larger banks. 

Current FD Rates by SFBs

Unity Small Finance Bank still holds the top spot with 8.50% p.a. for 1-2 year FDs, followed by ESAF Small Finance Bank  at 8% p.a.

Final Word

With inflation expected to remain high in 2024, SFBs may keep their FD rates competitive in order to attract investments. But the RBI's monetary policy decisions will be important to decide the trajectory of SFB FD rates.