Every year the budget does a reasonable job to ensure that the public are served well. They ensure that prices do not rise by a drastic level in comparison to the last fiscal year. Similarly this year, Budget 2018 have come up with many positive changes in the fixed deposit rates as well.
Fixed deposits are accounts where you deposit a certain sum of money for a particular period of time and then you receive a high interest each year. These fixed deposits are usually redeemable after 3 to 5 years for which you get back your principal amount along with the interest as well. It is an efficient mode of savings for common people in India.
The Budget 2018 made several changes to the FD interest rates Banks are likely to raise Deposit (Fixed Deposit) rates because of the following reasons:
Incremental credit
Till January 5, 2018 the fiscal credit stagnated at Rs 2.02 lakh crores, which have increased from Rs. 1.27 lakh crores. The banks are thinking to increase the interest rates to attract customers to have more fixed deposits with the banks. The banks want customers to deposit funds so as to improve their credit creation amounts which can edge out many undesirable fiscal deficit.
Edging out treasury losses
By offering more FD interest rates, the banks will be able to generate more capital to avoid fiscal deficit. Thus, this capital would be used to generate incremental credit with respect to reducing excess Statutory Liquidity Ratio (SLR). Statutory liquidity ratio is the minimum reserve that any commercial banks needs to keep in the form of cash, gold, bonds etc.
To reduce excess CWP
CWP is known as currency with public. Having excess currency with public means that they are not willing to look for investment opportunities which can take an adverse toll on commercial banks and various financial institutions. By increasing the rates, the public might look forward to investing as higher interest rates often act as bait.
Benefits to Senior Citizen
The budget 2018 proposes that tax deducted at source (TDS) is no longer required under section 194A. TDS rates have now been increased from Rs. 10,000 to 50,000. Therefore, there are no taxes charged on the interest which they receive on fixed deposits till Rs.40, 000. Whereas earlier the taxes were charged from Rs.10, 000. And senior citizens will also receive additional benefits for recurring deposit schemes as well.
Fixed deposits are accounts where you deposit a certain sum of money for a particular period of time and then you receive a high interest each year. These fixed deposits are usually redeemable after 3 to 5 years for which you get back your principal amount along with the interest as well. It is an efficient mode of savings for common people in India.
The Budget 2018 made several changes to the FD interest rates Banks are likely to raise Deposit (Fixed Deposit) rates because of the following reasons:
Incremental credit
Till January 5, 2018 the fiscal credit stagnated at Rs 2.02 lakh crores, which have increased from Rs. 1.27 lakh crores. The banks are thinking to increase the interest rates to attract customers to have more fixed deposits with the banks. The banks want customers to deposit funds so as to improve their credit creation amounts which can edge out many undesirable fiscal deficit.
Edging out treasury losses
By offering more FD interest rates, the banks will be able to generate more capital to avoid fiscal deficit. Thus, this capital would be used to generate incremental credit with respect to reducing excess Statutory Liquidity Ratio (SLR). Statutory liquidity ratio is the minimum reserve that any commercial banks needs to keep in the form of cash, gold, bonds etc.
To reduce excess CWP
CWP is known as currency with public. Having excess currency with public means that they are not willing to look for investment opportunities which can take an adverse toll on commercial banks and various financial institutions. By increasing the rates, the public might look forward to investing as higher interest rates often act as bait.
Benefits to Senior Citizen
The budget 2018 proposes that tax deducted at source (TDS) is no longer required under section 194A. TDS rates have now been increased from Rs. 10,000 to 50,000. Therefore, there are no taxes charged on the interest which they receive on fixed deposits till Rs.40, 000. Whereas earlier the taxes were charged from Rs.10, 000. And senior citizens will also receive additional benefits for recurring deposit schemes as well.
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