RBI monetary policy: Ladder your FDs and benefit from higher rates later

Home loan borrowers must pre-pay to prevent their loan tenures from rising

With the Reserve Bank of India (RBI) governor himself stating that rate hike in June is a no-brainer, the focus was on the quantum of the hike. The central bank has answered that question by going in for a repo rate hike of 50 basis points. This rate now stands at 4.90 per cent. Altogether, the central bank has hiked this benchmark rate by 90 basis points in the current rate-hike cycle.

Implications for depositors

Usually, the increase in bank deposit rates is not in sync with the repo rate hike by the central bank. Generally, banks hike their deposit