The Reserve Bank of India has been consistently raising the repo rate to control inflation, which has finally dropped below its tolerance level of 6 per cent. It has also been performing a balancing act, by reducing the volume of rate hikes, so that growth of the Indian economy doesn't suffer. Although higher interest rates, which hit 6.25 per cent after a 35 basis points hike by RBI this month, make loans and EMIs costlier, they work in favour of deposits.
With higher interest rates, people who have invested in fixed deposits stand to gain higher returns and payouts. Following RBI's move, ICICI Bank has also raised its interest rates to 7 per cent on FDs of Rs 2 crore, and for senior citizens, it has been hiked to 7.5 per cent. The rate hikes are different for FDs up to Rs 2 crore and those between Rs 2-5 crore.
For instance for FD as high as Rs 2 crore, the interest rate offered is 6.9 per cent for a 5 to 10 year tenure, while the interest rate is 6.75 per cent for the same tenure if the FD is valued more than Rs 2 crore and less than Rs 5 crore.
The lowest tenure for FDs is 7 to 14 days, for which Rs 2 crore FDs fetch a 3 per cent interest rate, while a Rs 2 to 5 crore FD brings 4.5 per cent interest.
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