The real story behind real interest rate

While the debate will continue about the benchmark rate to calculate real interest rate, both for the lenders and the savers, shouldn't all rates be higher than the rate of inflation?

Tamal Bandyopadhyay

Let’s call him Mr Saver. He represents the saving community in India, the world’s fourth largest economy. There’s a spring in his steps these days. The relationship manager of his bank had been chasing him, sending WhatsApp messages non-stop.
When he didn’t respond (Mr Saver has lost count of how many relationship managers he has had in the past few years!), the gentleman landed up at his doorstep and started pleading with him to open fixed deposits (FDs) with the bank. The rate for one- to two-year FDs has risen to 8 per cent for Mr Saver, a senior citizen.
This is a large private bank. Many are offering similar interest rates on FDs or even higher.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Feb 26 2023 | 4:23 PM IST

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