NEWS & ADVICE : FIXED DEPOSITS
IDBI offers floating rate fixed deposits
By Neelima Shankar
Aug 23, 2012
Print    Email    RSS   
Leading public sector bank IDBI Bank has announced the launch of its floating interest rate fixed deposit for the retail customers. The product would be called Floating Interest Rate Term Deposit (FRTD).

Unlike the contemporary term deposits, which offer a fixed rate of return, returns on FRTD would depend on the reference rate, which is the quarterly average of the yield of 364 Days T-Bill auctioned by the RBI.

"The interest rate in case of FRTD is anchored to a transparent, market-based rupee benchmark rate." The bank would revise the interest rates on these deposits every three months.

Customers can deposit a mimimum of Rs. 10,000 further adding multiples of Rs. 1,000 upto a maximum of Rs. 1 crore. The maturity period offered for FRTD would range from a minimum of 1 year upto a maximum of 10 years.

Existing customers with fixed interest rates term deposits would be allowed to convert to FRTD by closing their FD without any penalty. However the reverse would not be allowed.

The move to offer such product comes on account of RBI's directives to the banks at the first quarter review of monetary policy last month. RBI had said that offering such deposits would be good for the bank's balance sheet.

IDBI feels that such kind of deposits would be hit with customers who want to hedge against their floating rate borrowings and those who want to leverage the upward fluctuation in interest rates. Also this would reduce the interest rate risk for consumers who deposit in fixed rates, but borrow fluctuating rates (home loan/car loan).

Previously SBI had released floating rate term deposits in 2001 and 2010, but it was not very successful, but IDBI is confident of its approach and hopes to strike a note with the consumer.


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Complete guide to TDS on fixed deposits in...
Recurring deposits: to the benefit of the...
Know all about non-bank fixed deposits
Carnival of Indian Personal Finance Blogs...
The new avatar of savings account would...


MEXING: CaℒL Giℛℒ In Hoshiarpur 09855660911...
Sakeela.CaℒL Giℛℒs In Kharar 0985566O911...
NANGAL: CaℒL Giℛℒ In Una 09855660911 Escoℛt...

NEWS THIS WEEK
Federal Bank launched V connect for its customers Feb 12, 2015
Andhra Bank on expansion mode Feb 11, 2015
Dena Bank earned a profit of 13%. Feb 9, 2015
Banks expected to cut down the rates Feb 5, 2015
RBI kept the rates unchanged Feb 4, 2015
News Archive