Impact of RBI MPC meeting outcome
On how the RBI MPC meeting outcome would impact bank FD returns of senior citizens, Pankaj Mathpal of Optima Money Managers said, “The repo rate cut is going to affect FD rates negatively as banks would cut FD rates across tenors once they pass on this repo rate cut decision to their customers. So, senior citizens and other bank FD investors are advised to book a bank FD account now, as a change in bank FD rates doesn’t impact old bank FD accounts. If they fail to take this opportunity, they can look at time deposits in the post office small savings schemes.”
On the top five options that senior citizens should do immediately or by the end of June 2025, Pankaj Mathpal said, “Senior Citizens planning to open a bank FD account in the near-term are advised to book a bank FD account before the bank passes on this rate cut benefit to their customers. If they fail to do this, they should look at time deposit schemes of post-office, senior citizens saving scheme, PSU bonds, and debt mutual funds.”
Top 5 options that senior citizens may look at
1]Book bank FD account immediately: “As it would take time for the Indian banks to pass on the rate cut benefit to its customers, senior citizens and other bank FD investors are advised to book a bank FD account now, as a change in bank FD rates doesn’t impact old bank FD accounts,” said Pankaj Mathpal.
2]Time deposit in the post office: “Time deposit comes under the government of India backed-small savings scheme, and its interest rate doesn’t change with the change in bank FDs. It changes every quarter quarterly, and hence, any post office time deposit change can be expected in the July to September 2025 review. So, suppose a senior citizen opens a time deposit account in the post office, which has the same investment model available in banks’ FDs. In that case, they can expect a higher yield on one’s money than bank fixed deposits,” said SEBI registered Jitendra Solanki.
3]Senior Citizen Savings Scheme: “This is also an option that a senior citizen can look at in June as the government may also consider decreasing the low savings schemes’ interest rate in the next quarter amid the lowering interest rate regime. Suppose a senior citizen opens a senior citizen’s savings account in June. In that case, it will continue to yield a higher yield on one’s money even if the central government decides to decrease the interest rate of a senior citizens savings scheme,” said Jitendra Solanki.
4]PSU bonds: “Amid lowering interest rates, banks are expected to witness lower deposits in upcoming quarters. In that scenario, banks will have to look at other options to generate funds to meet the rising demand for lending. So, bank bonds are expected to flood. Hence, senior citizens are advised to look at PSU bonds as they are safer than corporate bonds. A corporate bond yields around 8 per cent in the medium term, while a PSU bond yields around 6.50 per cent to 7 per cent, which is still higher than bank FD interest rates,” said Jitendra Solanki.
5]Debt mutual funds: “Debt funds are also considered a safe bet, which senior citizens can look at. It also yields around 7.50 per cent to 8 per cent in the medium to long term. So, senior citizens looking for bank FDs for the long term are advised to look at PSU bonds in the wake of RBI’s repo rate cut and its impact on bank FD interest rates,” said Jitendra Solanki.
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