How is the interest rate calculated on a ₹3-crore FD?

The factors impacting interest rate offered on fixed deposits of high amounts, such as ₹3 crore, include:

1. RBI Repo Rates and Market Liquidity: Key benchmark lending rates set by the RBI and overall market liquidity conditions influence FD interest rates offered by financial institutions.
2. Financial Institution’s Fixed Deposit Rate Policies: Each financial institution has its own rate policies and asset-liability management guidelines to determine FD rates.
3. Financial Institution's CASA Position: Financial institutions with lower Current Account and Savings Accounts (CASA) offer higher rates to attract more term deposits.
4. Credit Offtake Demand: Financial institutions with liquidity but lower credit growth may offer higher deposit rates.

Illustrative Example: How Interest Rate Might Be Determined for a ₹3 Crore FD

Financial institutions may not use a fixed formula to calculate interest rates for bulk deposits (₹1 crore and above). Instead, rates are negotiated individually based on internal policies and market conditions. However, to help understand the influencing factors, here’s a conceptual framework—not an actual rate calculation:

Let’s assume your chosen bank or NBFC is evaluating a ₹3 crore FD for a 2-year tenure. The interest rate might be influenced by:

• Base Market Rate: Assume 6.75% (based on current deposit trends)
• Tenure Premium: +0.25% for locking funds for 2 years
• Relationship Bonus: +0.10% for long-term customer

Estimated Rate: 6.75% + 0.25% + 0.10% = 7.10% p.a.

Note: This is an approximate hypothetical calculation to illustrate the parameters impacting large FD interest rates. The actual FD rate calculation methodology can vary across different financial institutions.