The Buyt Desk
Yes Bank links its Fixed Deposit interest rates with repo rate. This means that the fixed deposit of YES bank will be adjusted as per the policy rate revision. Let us understand its deposits, penalties, tenures and other details.
Yes bank is a private sector bank in India. It has started a new product for all domestic customers. This novel scheme is Floating Rate Fixed Deposit. Now the interest rate on fixed deposits (FDs) at Yes bank is linked with the current repo rate of RBI. This means the returns on FD are dynamic and not fixed so that the customers are benefited by the repo rate hike scenario. This is the Yes bank’s way of attracting new customers and expanding the customer base. The tenure of this product can be anywhere between 1 to 3 years and deposit amount can range from Rs 10000/- to Rs 5 crores. The tenure and deposit amount cannot go beyond the defined range. In the past 2 -3 years the inflation rate is too high, to bear this the RBI is increasing the policy repo rates regularly. In the last 2 months i.e., in May and June 2022, repo rates have gone up by 90 basis points. With all this increase, the current RBI repo rate is 4.9%.
What is Floating Rate Fixed Deposit?
In a traditional FD, the interest rate will be the same throughout the tenure of the deposit, be it a few days or years. But in Floating Rate Fixed Deposit, the interest rate is associated with the prevailing REPO rate. The interest rates are directly proportional to REPO rates. Currently the REPO rates are increasing and so will be the interest rates of Floating Rate Fixed Deposit. This will allow customers to enjoy the higher returns on their FDs. Dynamic returns is the main advantage of this product. Also the interest rate is revised automatically and does not need any manual intervention either by the Bank or the customers.
The beauty of this novel product is that it offers customers the safety of a FD along with dynamic returns which change as per the Repo rates published by the RBI. This is a very good enhancement of retail products by Yes bank.
How to open a Floating Rate Fixed Deposit?
Yes Bank has set out steps to open a Floating Rate Fixed Deposit. One way is to visit the nearest branch with basic documents. It also provides the facility to open a Floating Rate Fixed Deposit from your comfort by giving a missed call on 07127191191.
What are the key features of a Floating Rate Fixed Deposit?
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Deposit amount – The deposit amount can range from Rs 10000 to Rs 5 crore only.
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Tenure – The tenure for the floating FD can be from 1 year to three years only.
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Rate of Interest (ROI) reset – On the first day of every month, Yes Bank will reset the interest rate of Floating Rate Fixed Deposit subject to change in Repo rate. ROI = repo rate + mark-up rate.
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Mark-up rate – The Mark-up rate is an added rate of interest offered by the Yes Bank in addition to the Repo rate. For tenure ranging from 1 year to 1.5 years the mark-up rate is 1.1%. And for tenure ranging from 1.5 years to 3 years, the mark-up rate is 1.6%. Also yes bank provides senior citizen benefit where additional mark-up rate of 0.5% is given to senior citizen depositing amount between Rs 10000 to Rs 2 crore additional mark-up rate of 0.45% is given to senior citizen depositing amount between Rs 2 crore to Rs 5 crore and tenure between 1 year to 1.5 years. Also, an additional mark-up rate of 0.25% is offered for senior citizens opting for tenure between 18 months to 36 months.
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Penalties – Penalty of 1% is levied on premature withdrawal on FDs less than ₹5 crore when made above 1 year. Penalty of 2% is levied when withdrawal is made between 182 days and less than 12 months. Penalty of 2.50% is levied when withdrawal is made between 91 days to 181 days. Penalty of 3% is levied when withdrawal is made between 7 days to 90 days.
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Domestic customers – Offer available only for Resident Individuals & Non-Individuals.
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OD on FD – Additional liquidity can be enjoyed with an Overdraft facility (OD) on the FD up to 90% of the principal value.
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Dynamic interest rate – Maximizing your returns is the benefit of the dynamic interest rate.
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Auto ROI reset – Monthly automatic reset of the interest rate with respect to the applicable REPO rate in the previous month.
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Reinvest – At maturity reinvestment option available with payout.
