Banks continued to raise fixed deposit rates on Thursday, including HDFC Bank and Punjab National Bank (PNB). While HDFC Bank raised rates by up to 40 basis points for various maturities, PNB raised rates for term deposits with maturities of 1 to 3 years, five years and above, and up to 10 years.

While the increase may boost returns for savers, interest rates are still well below stock market rates, especially since the interest earned is taxable.

As business activity resumes, loan growth has been trending upward over the past few months. Non-food credit rose 14.5% year over year in the two weeks ending July 29. However, deposits in the banking system increased by 9.1% yearly, a slowdown in growth. As a result, banks have been trying to consolidate their deposit bases.

HDFC Bank has increased fixed deposit (FD) rates by 40 basis points. These amounts are less than Rs 2 crore. The lender’s website says that FDs with maturities of one to two years will now earn 5.5% interest – an increase of 15 basis points. One day to three years will continue to earn 5.5% for two years. The bank has raised interest rates on three-year, one- to five-year terms by 40 basis points to 6.1% from 5.7% previously.

PNB raised the rate for time deposits due within one year by 20 basis points to 5.5% from 5.3%, while the bank raised the rate for time deposits due within one year by five basis points to 5.5% from 5.45%. 5.5%.

Private sector lender, IDFC First Bank has raised fixed deposit rates below Rs 2 crore and now offers 6.5% for FDs maturing in 2 years one day to 749 days and 6.9% for FDs maturing in 750 days. The Federal Bank has also raised the fixed deposit rate below Rs 2 crore. The bank now offers fixed deposit rates ranging from 7 days to over 75 months, ranging from 3% to 5.75% for the general public and 3.5% to 6.4% for seniors.

However, personal finance experts point out that equity has provided long-term returns of 12% or more over the past 20 years. Adhil Shetty, CEO of Bankbazaar, observes that FDs, on the other hand, have an average return of around 5-7%. “As a result, rising fixed deposit rates are not enough for equity investors to move money. However, FD investors who are prepared to take risks may move money into stocks if they want to stay invested long-term,” Shetty said.

Chaitali Dutta, the founder of AZUKE Personal Finance Advisory, observes that the NIFTY level an investor enters is unimportant due to the compounding effect of investments. “So, the SIP route is preferable to an equity MF, and you can also average the purchase price,” Dutta said. However, she added that if expenses arise within 12 months, funds can be deposited in a bank FD or a company FD within the appropriate period.