Why is the knowledge of interest rates important
for a retail banker?
How does it impact the sales pitch?
What are investors options during high & low interest rates
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knowledge of retail banker on Interest rates
1. Why is the knowledge of interest rates important
for a retail banker?
How does it impact the sales pitch?
What are investors options during high & low interest rates
Faculty name:
Vishwanathan R
Batch code
HYD01AA0213
Date
30-10-2013
Student Name
Enrolment ID
Harivardhan
E130031000112
Rajasekhar
E130031000127
Kowsar
E130031000129
Amit
E130031000147
2. S. No
Description
1
Interest Rates
2
Different types of Interest Rates
3
Factors affecting Interest Rate
4
Correlation between Interest Rates and Investment
5
Best investment option on current Interest Rates
6
Essential things to know for a retail banker on Interest
Rates
7
Bottom Line
8
Bibliography
3. Interest rate
This is the amount calculated as a specified percentage of the
amount lent to the Borrower. This amount is paid by the borrower
to the lender.
Interest rate
Lender
Borrower
Period
Current
interest rate
Previous
Interest rate
Bank rate
RBI
Commercial
banks
Long period
8.75%
9.00%
Repo rate
RBI
Commercial
banks
Short period
7.75%
7.50%
Reverse repo
rate
Commercial
banks
RBI
Short period
6.75%
6.50%
Base rate
Commercial
banks
Customers
Bank
regulates
-----
-----
Call rate
Bank
Bank
Bank
regulates
-----
-----
Deposit rate
Customer
Bank
Bank
regulates
-----
-----
4. Factors affecting interest rates
Demand/Supply
of money
RBI
When economy is
growing
Govt borrowings &
Fiscal deficit/OMO
Inflation
International
forces
6. Investment option when interest rates
HIGH
LOW
• FMP
• CD’s
• NCD
• CD’s
• Corporate Bonds
• Stock
• Bank deposits
• Home loan
7. • Fixed maturity plans: A close ended fund that invest in debt and
money market instrument. Focus of a fixed maturity plan is to provide
a stream of income through interest payments, while exposing
the investor to a lower level of risk.
• Eg: Short-term debt instruments
8. • These plans invest in a mix of short-term options, such as money
market instruments, certificates of deposit, commercial papers etc.
• These are currently offering a yield of 9.5-10%.
• Diminishes the uncertainity of higher yields, which most of debt
market products do not offer.
10. Essential things to know for a retail banker on Interest Rates
• Flourishing economy indicates rising Interest rates,
making it essential for the Banker to advise their
customers on various Investment options.
• Rise in OMO confirms that Govt securities & debt
market are the safest bets.
• Key Interest rate changes confirms the RBI’s
intentions to combat Inflation.
11. • Protection through Indexation FMP's more beneficial than FD's, as the interest is
not clubbed with income, & is taxed only after indexation.
• Leading FMP’s Reliance Mutual Fund, ICICI Prudential Mutual Fund, Birla Mutual
Fund, TATA Mutual Fund, DSP BlackRock Mutual Fund and others.
• The investment is earmarked ONLY in BANK CDs/FDs.
• Investments & returns are guranteed.
• TDs after Indexation.
• Nri investor’s yeild rose from 8.5 to 9%, with total repatriation.
• Similar to the FD of a bank’s , in terms of a pre-determined return to the investors/
depositors.
12. Investment when interest rate is low
Home Loan
• It is a good investment
option when the interest
rates are low.
• Get loan at cheaper rate of
interest
• Tenure: minimum for 15
years
13. Bottom Line
• It is important to know the interest rates to
retail bankers to guide their customer in a right
way.
• Leads to increase the sales pitch
• Leads to retain a customer for a longer period.
