Real returns from fixed deposits remain negative for 10 months

by Yash Shah

In a report issued by SBI’s research wing, it said that negative real interest rates are likely to become the new norm. This will be a result of household savings continuing to rise in India despite lower rates on deposits. August was the tenth straight month of negative real returns from fixed deposits (FDs). The trend may persist longer as banks, including State Bank of India (SBI), have cut rates even in September. The return on a one-year retail term deposit with SBI adjusted for tax and inflation stood at -3.12 per cent in August. SBI has reduced the interest rate on 10 September 2020 on one-year term deposits to 4.9 per cent and this could hit returns further.