Stabilise your Fixed Income with mutual funds

 

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) headed by Reserve Bank of India (RBI) Governor Shaktikanta Das kept the repo rate unchanged at 4 per cent for the 10th consecutive time while maintaining an ‘accommodative stance’ as long as necessary. The reverse repo rate will continue to be 3.35 per cent. The central bank had last revised the policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low.

The Marginal Standing Facility (MSF) rate and bank rates remain unchanged:

·         Policy Repo Rate: 4.00%

·         Reverse Repo Rate: 3.35%

·         Marginal Standing Facility Rate: 4.25%

·         Bank Rate: 4.25%

·         CRR: 4%

·         SLR: 18.00%

 

On Monday(14/02/2022), data released by the National Statistical Office (NSO) showed that retail inflation, as measured by the consumer price index (CPI), rose to a seven month high of 6.01 per cent in January, up from 5.66 per cent in December. This is the first time since June last year that inflation has come in above the upper limit, although marginally, of the inflation targeting framework of the RBI. Considering that the RBI expects inflation to average 5.7 per cent in the fourth quarter (January-March), CPI will now have to moderate considerably in the next two months to be in line with the target.

The weighted average cut-off of the aggregate issuance softened by 13 bps to 7.11 per cent, from 7.24 per cent last Tuesday(08/02/2022), despite the weighted average tenor increasing to 15 years from 12 years.

This is similar to the easing seen in the 10-year G-secs; (6.54 per cent, 2032) yield, which closed at 6.67 per cent, 14 bps lower than last Tuesday(08/02/2022)

 

Compare to this background, what is the rate of bank FDs offered?

Revision in Interest Rates On Retail Domestic term deposits (Below Rs. 2 crore) interest rates revised w.e.f. 15.02.2022 by SBI

 

All figures in % per annum)

 

Tenors	Existing Rates for Public w.e.f. 15.01.2022	Revised Rates For Public w.e.f. 15.02.2022	Existing Rates for Senior Citizens w.e.f. 15.01.2022	Revised Rates for Senior Citizens w.e.f. 15.02.2022
7 days to 45 days	2.90	2.90	3.40	3.40
46 days to 179 days	3.90	3.90	4.40	4.40
180 days to 210 days	4.40	4.40	4.90	4.90
211 days to less than 1 year	4.40	4.40	4.90	4.90
1 year to less than 2 year	5.10	5.10	5.60	5.60
2 years to less than 3 years	5.10	5.20	5.60	5.70
3 years to less than 5 years	5.30	5.45	5.80	5.95
5 years and up to 10 years	5.40	5.50	6.20	6.30

 

(as accessed on 16-02-2022)

 

This is why one should have Mutual funds in your portfolio in a reasonable manner

Mutual Fund Investments are subject to market risk. Consult your MFD and read offer document before investing