Of the six times the Reserve Bank of India (RBI) sat for the evaluation of the monetary policy in 2017, only when in August 2017 did it cut the repo price , and maintained status quo on the remaining five. For these who have invested heavily in bank deposits and are up for renewal in the near future, they would be far better placed by renewing them for a shorter period like 6 -9 months and wait for the rates to stabilise or show a slight uptrend.
This is since the base price mechanism was replaced with the marginal cost of funds based lending price (MCLR) regime in April 2016 and considering that then all lending is linked to a bank’s MCLR As a result, a lower base rate will only support borrowers who have loans nonetheless linked to the base price. Though returns in the hands of a debt fund investor are tax-free, the taxability exists in some other kind in them.
– Money Market Mutual Funds
In addition, it will consist of a image of a type that could be noticed in the gallery of Old Mutual Cash Market Fund Interest Price. As for debt mutual fund investors, with bond yields displaying a rise in the current past, debt mutual fund investors need to have to be cautious in the coming months. In addition to other things such as credit profile of the securities, the returns in debt funds will rely on the maturity profile of their underlying securities.
Additional, none of the other banks have cut their base rates.
Of the six occasions the Reserve Bank of India (RBI) sat for the assessment of the monetary policy in 2017, only after in August 2017 did it cut the repo rate , and maintained status quo on the remaining 5. For these who have invested heavily in bank deposits and are up for renewal in the near future, they would be far better placed by renewing them for a shorter period like 6 -9 months and wait for the rates to stabilise or show a slight uptrend.
– Mutual Funds Interest Rates
By January 2017, banks had been already flushed with funds and interest rates were anticipated to continue on its downward slide as noticed in the previous years. Quite a few instances in the previous, even when the yield had come down, the government had maintained the small savings prices. As far as debt mutual fund investors are concerned, the impact of increasing yields is a lot more on the schemes that hold long-term securities compared to these holding bonds which are maturing early.
Secondly, banks may well be feeling the liquidity squeeze and interest rates may be moving up. It is not just an raise in credit off take, but the government’s enhanced borrowing news is expected to maintain the yields larger. Further, none of the other banks have cut their base prices. Thus, investing in the ideal debt fund by matching your expectation and time period is essential. RBI could uncover itself not in a position to cut rates further in 2018 or could squeeze in a modest reduce in the later element of the calendar year.
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