Share Vs FD: In the investment sector, the stock market has experienced a significant decline over the last eight to ten months, leading to a period of high volatility. During this time, people’s interest in fixed deposits (FDs) in banks is increasing again. Many individuals who faced losses in the stock market are now turning to FDs for secure investments.
According to the RBI report, investment in high-interest FDs is steadily rising and has increased by 23 times. The RBI’s monthly report also reveals that the share of fixed deposits (FDs) under various bank deposit schemes was very low in March 2022.
RBI Report Shows Surge in Investment in High-Interest Fixed Deposits (FDs)
The report reveals that only 2.8% of the money was deposited in various FD schemes offering interest rates between 7% and 8% in March 2022. This figure has increased to 64.9% by December 2024, marking an unexpected rise in the last three years. Additionally, the share of FDs with interest rates over 8% has grown from 1.7% to 5.9% during this period.
Decline in Investment in Low-Interest FDs
On the other hand, the percentage of money deposited in FD schemes offering returns of less than 5% has decreased. In March 2022, up to 34.2% of the money was placed in these schemes, but by December 2024, this had fallen to just 2.9%.
Banks Have Overcome Deposit Crisis
Banks have also overcome their deposit crisis. Earlier, until June-July of last year, banks faced a shortage of deposits. Finance Minister Nirmala Sitharaman had warned banks to offer attractive FDs to encourage customers to deposit money. Following this, banks launched special campaigns to bring in more deposits.
Why Bank FDs are Considered the Safest Investment
According to Ashwani Rana, founder of Voice of Banking and banking expert, several factors explain the rise in investment in high-interest FDs. First, the stock market has faced turbulence for the last 10 months, leading to significant losses for many investors. As a result, people have shifted their investments from the stock market to safer options like bank FDs. Second, banks have not altered their high-interest FD schemes in the past year. In fact, many banks have even increased interest rates, making FDs in banks a safer investment option with good returns.
Interest Rate Breakdown of Fixed Deposits
| Year | Less than 5% | 5-6% | 6-7% | 7-8% | More than 8% |
|---|---|---|---|---|---|
| March 2022 | 34.3% | 51.4% | 9.9% | 2.8% | 1.7% |
| March 2023 | 7.0% | 31.9% | 27.5% | 30.3% | 3.4% |
| March 2024 | 5.5% | 8.1% | 22.2% | 58.9% | 5.5% |
| December 2024 | 2.9% | 5.5% | 20.8% | 64.9% | 5.9% |
Increase in Loan Borrowing
The data also shows a rise in loan borrowing year over year. This increase is seen as positive for the economy, especially in sectors like agriculture, industry, and housing. The growth in these areas is considered beneficial from an economic standpoint.