The current economic climate doesn’t augur well for high fixed deposit [FD] rates. So far, the Reserve Bank of India has kept key rates unchanged — repo, reverse repo, MSF rate, and bank rate — as it maintains an ‘accommodative stance’ to mitigate the impact of the ensuing Covid-19 pandemic. The ripple effect is that “you can’t put your bank money in a fixed deposit (FD) anymore,” says Nikhil Kamath, co-founder of Zerodha and True Beacon.

Speaking to Fortune India, Kamath says that we are accustomed to 7% to 8% returns on our bank FDs. “And now, when it says 4% and inflation is 4.5% to 5%, it [FDs] doesn’t make sense,” says Kamath. “Banks have lost the power to attract money like they once had with just that FD rate,” he adds.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.