It’s going to be a mixed year for people on the money front. For savers it is going to be a good year as interest rates on bank deposits are set to increase further in 2011. On the other hand borrowers will have to shell out more money as interest rates on their loans are on rise with banking regulator Reserve Bank of India (RBI) on rate hiking spree.
Both the pain and the gain are likely to intensify as there is still a room for rise in the interest rates.This means a person who has taken a home loan two years ago will see his EMI rising further, making a big hole in his pocket. Similar is the case with Personal loans, Auto Loans and Corporate loans.
However savers are laughing their way to the banks. The rates of the Fixed Deposits have shot up since the last quarter. You can earn up to 8.5% interest rate on your one year Fixed Deposits. The coming months will also see Fixed Deposits of the companies, on-convertible debentures, and other fixed income instruments gaining momentum.
The liquidity crunch in the system and the banks’ requirement to mop up funds has been pushing deposit rates upwards. Potential upside risk to inflation in an environment of moderating growth will make the Reserve Bank‘s job tougher in 2011. More tightening measures are expected to be taken by RBI through the course of 2011 to get inflation within the comfort zone.
Unitedworld Executive.
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