Customers lap up FDs before rates fall again.

ET 1/1/09

Customers have swamped banks to put money in fixed deposits in order to garner high interest rates, as most banks plan to cut deposit rates by upto 1.25 percentage points from January 1. The daily collections have gone up nearly three-fold for some banks.

Many bank branches are finding it difficult to dispose off the deposit-related work on the same day because of this rush. December 31 was also the quarterly closing for the banks and this had made things even more difficult.

“We were collecting about Rs 1 crore daily on account of fixed and term deposits for different time periods from the last few months. However, over the last few days the average collection is hovering at around Rs 3 crore,” said a Bank of India branch manager. Interest rate

on fixed deposits has already come down by a percentage point this month and another round of cuts is expected in January and February. At present, the peak rate at fixed deposits is 10% (banks offer an additional 0.5% to senior citizens).