Is going for fixed deposit with the current interest rate will be the right decision?

Demonetisation leads to higher bank deposit that may put pressure on bank to reduce the interest rate very soon. The higher the deposit amount higher will be the outflow of banks in the form of interest payable to depositor.  Looking at the scenario the loan ratio will be comparably low with respect to deposits in this quarter. This situation seems to continue or not in the last quarter will depend on the key reforms taken by government in the budget 2017.

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Demonetization has also reduced liquidity from the market, Further action from the government against Black Money may tightened it more in the coming time. Time ahead the banks will be with full of cash and lower liquidity in the market may put pressure on the RBI to go for monetary measure to control the situation. So we expect some 50-100 Basis points cut in interest rate in around 1 year from here.

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