Kolkata: After a gap of five years, the Reserve bank of India has flagged off the declining interest rate cycle in the country with a view to making cheaper funds available to the common consumer and lending institutions as a whole with a view to boosting consumption and growth rates. In the first week of February, RBI monetary policy committee — the rate-setting body of India’s central bank — trimmed the repo rate from 6.50% to 6.25%. What’s more important is that a SBI Research report has stated that there could be two more such acts of trimming the key policy rate this year.

No doubt, the downward interest rate cycle will bring down the interest banks pay their customers on fixed deposits (FD) on various tenures. Therefore, this is the best time for depositors to lock long term interest rates. Though FDs lag behind equities and equity-linked mutual funds in returns, they are an extremely significant investment instrument........

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