Fixed Deposits - An Investment That India LOVES

Being financially safe is the BEST feeling one can get. Such a feeling is increasingly depicted in India’s growing inclination towards fixed deposits that assure fixed returns to investors regardless of market movements. As per the SEBI survey, 95% of Indian families trust fixed deposits to grow their money. The emotion towards fixed deposits is positive all over India, whether it’s about metro cities, urban cities or other locations. The moral of the story is - we all want that safety net to navigate a world laced with chaos and uncertainties. Let’s dive into interesting stats revolving around fixed deposits in India. 

Trillions Invested in Bank FDs During Oct-Dec 2023 as Per the RBI Data

Both public and private sector banks witnessed a massive cash inflow into fixed deposit accounts as per the data revealed by the Reserve Bank of India (RBI). As per the data, private sector banks’ fixed deposit value touched INR 1.59 trillion during October-December 2023. Public sector banks, on the other hand, saw their fixed deposit book reaching INR 1.18 trillion during the same period. Small Finance Banks also joined in the act by raising fixed deposits worth INR 8,390 crore during this period. 

Investments in Fixed Deposits from All Over India

The RBI data revealed a massive inflow into fixed deposits by people across India. As per the data, metro cities accounted for INR 27.43 trillion out of the total INR 41.11 trillion raised by private banks as of December 2023. Fixed deposits worth INR 8.2 trillion remained across urban cities. Whereas metro cities contributed INR 36.75 trillion to public sector banks’ fixed deposit book. Urban cities chipped in with INR 15.94 trillion worth of fixed deposits for these banks. Investments other than the aforesaid amount were picked from semi-urban and rural locations.

Why Do Indians Love Investing in Fixed Deposits?

There’s something about a fixed deposit that fascinates the masses. Here we list out the reasons. 

Safety Reigns Supreme in Everyone’s Mind

Fixed deposits are an investment that calms everyone’s nerves when markets fall due to uncertain political or business developments around the world. With 95% of Indian families trusting fixed deposits, a stat we disclosed in the beginning, is a reminder of how cautious they are with money. Understandably so, given the numerous financial goals they need to achieve at different points of time. They can’t afford any volatility. With fixed deposits ensuring the same regardless of times, they have grabbed people’s attention. Something that has translated into numbers now. 

Rising Fixed Deposit Interest Rates Further Add to the Investment Appeal

Fixed deposit interest rates of private, public and small finance banks are rising as they want more cash to meet their liquidity requirements. With lending rates continuing to stay elevated owing to inflation staying above the RBI’s comfort zone (2-6%) for most of the last two years, banks have room to raise FD interest rates. Public and private sector banks are offering interest rates of 7-8% per annum. Small finance banks have raised interest rates to upto 9.30% per annum.

Increased Public Awareness on Achieving Financial Goals with Fixed Deposits

Indians are becoming smarter by the day when it comes to investments. They don’t invest just for the sake of it, they become calculative and figure out how to achieve financial goals safely.  Fixed deposit calculators, available online, guide them to achieve their goals. Like how much investments are required and for how long they should stay invested to garner the required amount. BharatFD, an online fixed deposit marketplace, comes with a wide range of financial insights, including fixed deposit calculators, to help people make an informed call. 

Conclusion

Each investment, including a fixed deposit, has its own USP. As a financial advisor, we recommend spreading your investments across asset classes to diversify your portfolio. Doing this will help you feel assured and achieve your financial goals. Up your investment with the rise in your salary to earn inflation-beating returns season after season.

References:

Why do Indians Prefer Fixed Deposits?

Private banks outpace public peers in raising FDs - Banking & Finance News | The Financial Express