Silicon Valley Bank brings equity fear; FDs make strong comeback
By S Jha
New Delhi, March 12: With jitters spreading across the global equity markets following the collapse of California-based tech-high Silicon Valley Bank, the good old fixed deposits are back in fashion and also in the savings and investment options of the people. The banks have aggressively begun advertising fixed deposit plans to shore up their deposit levels.
The non-banking financial institutions are seen leading the race by offering as much as 9.10 per cent on the fixed deposits for tenures of one year and more. They are also appealing to the senior citizens to go for the FDs by offering them an additional 10 basis points on returns.
Shriram Tranport Finance for instance has aggressively hit the market with its 9.10 FD return offer, which incidentally is the top ceiling offering. General investors can hope to gain about 8.90-9 per cent returns on fixed deposits. Several PSU banks such as Punjab National Bank are seen aggressively marketing FD plan.
In the NCR Delhi, the PSU Banks are taking the while of Metro trains to advertise the FD schemes, which are 8.65 per cent and more. The private banks are also matching similar FD returns. Interests on the FDs are taxed.
It may be noted that the public providend fund and other tax savings instruments are offering interest returns in the range of 7-7.10 per cent. The MCLD-linked home loans have seen the interest rate spiking to 9.50 per cent within a short span of time.
The banking experts claim that the financial institutions are struggling to shore up their deposit bases following aggressive rate hikes by the Reserve Bank of India following similar measures by the US Federal Reserve in its bid to tame the runaway inflation.
But the people are seen going back to the FDs also for the reason that the equity market now almost for over 18 months has been in the grip of volatility, as the FIIs dumped the Indian equities on account of rising dollar, China Reopening, Ukraine War and other reasons.
The Silicon Valley Bank collapse has now brought a fresh fear factor in the equity market. The SVB was highly celebrated in the US, as it was at the forefront of the startup boom across the world. With equity market not getting any breather from the flow of negative cues, the investors who had forgotten the good old ways of accumulating assets now are opting for FDs.
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