The RBI raised its repo rate in October, but most banks have not raised fixed deposit rates. Banks raise deposit rates when they need money, and many are flush with funds after a surge in foreign currency deposits earlier this year.
RBI data shows the gap widening. The average rate on fresh loans rose from 8.52% in July to 8.61% in August, while the average rate on fresh term deposits fell from 5.85% to 5.67%.
If you are about to put money in an FD, compare rates across banks, including small finance banks, which often pay more. Existing FDs keep their original rate until they mature.
