The Kerala government has taken a significant step by raising the interest rate for short-term fixed deposits in treasuries, a move that has garnered attention amidst ongoing controversies within the cooperative banking sector. In the wake of recent incidents involving bogus loans in cooperative banks, the government aims to attract investors who are withdrawing their fixed deposits from these institutions. This strategic measure is expected to help the government sector retain investments and curb the flow of funds into public sector banks.
It’s worth noting that many public sector banks already offer higher interest rates for short-term deposits compared to treasuries. Recognizing this competition, the Treasury department decided to implement the interest rate hike from October 1.
In response to the restrictive measures imposed by primary cooperative banks, which have limited the maximum withdrawal amount to Rs 2 lakh per transaction, a substantial number of individuals have chosen to reinvest their funds in treasuries. Unlike banks that often provide preferential rates for fixed deposits by senior citizens, treasuries offer attractive interest rates across all categories without specific classifications.
Additionally, investors have shown considerable interest in the ‘Nettam’ Deposit scheme offered by the Kerala State Financial Enterprises (KSFE), which provides an enticing 8 percent annual interest rate. This diverse range of investment options reflects the dynamic financial landscape in Kerala.
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