Due to ELSS, the temptation to dissolve the 5-year FD
IBA has said that tax saving 5-year FDs have become less attractive when compared to other financial products like ELSS. If the lock-in period is reduced, then it will increase the inclination of people for FD. In such a situation, it may be that in the budget this time something should be said about FD of 3 years and you can get the gift of tax exemption on FD of 3 years also.
Very low interest rates on FDs
Banks have also reduced the interest rates quite a bit, but the interest rate on products like PPF is getting very good as compared to FD. Because of this also people are investing less in FDs. Many people are also investing in mutual funds and shares. People are trying to avoid 5 years FD. In this case, FD of 3 years can also be included in Tax Saver FD.
Investors turning to Small Savings Scheme
In the last meeting of the RBI Monetary Policy Committee held in December, it has been decided not to change interest rates for the 9th time in a row. At present, the repo rate is 4% and the reverse repo rate is 3.35%, due to which the interest on FD is also given less by banks. At the same time, there has been no change in the interest rate on small savings schemes like PPF, Sukanya Samriddhi Yojana, KVP, NSC for the last several quarters, due to which FD investors are turning to that too.
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