POSTED BY March 31, 2014 8:30 pm COMMENTS (5)
ONI was thinking of opening a FD in IDBI bank.
I looked on the interest rate provided by them on this link.
http://www.idbi.com/interest-rates.asp
6 months 1 days |
8.75 |
6 months 2 days to 499 days |
9.10 |
What I did not understand is that why they have a different scheme for 6months 1 days?
Bcoz anyone who will wants to book for that can go for 6 months 2 days. and earn .35 interest more.
Why they make it differently?
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There is no specific reason for this , At some point they need to increase the interest rate for some duration, and one is free to make X days FD, so there will always a point when they need to increase it .
Dear Niki, every bank do this to segregate the terms of FDs and thus asset liability.
Thanks
Ashal
Interesting!!
Conjecture: The Banks make the relatively lesser profit lower end of the tenure given an interest rate than at the upper end of the tenure. I think this follows a quadratic function. But what is interesting they pay 1.1% extra if you hold for 3- more days!! Will definitely search for this- The tenure & Interest rates!!
Not for 3 more days. Just for 1 more day. Still has not got my answer. why they do this?
Dear Niki, banks are free to given interest rates for different time bands as per their choice by RBI. As a customer, it’s our choice to opt the term of FD as per our need.
Thanks
Ashal