To my knowledge 8.6% is the highest interest rate for Senior citizen among other banks in india apart from small financing banks. Few months back they were providing 7.8% and later they increased to 8.1% and now they have increased to 8.6%. There are some news that they are in talks with 3 investors to finish the deal. So I was looking for clarification that this increase in FD interest rate to attract more FDs so that their asset quality will increase and there by their valuation of assets while selling it to new investor. I just want to know if the logic is correct?
Asset quality increases when their NPA's reduce afaik.
Money coming in by way of FD customers is not as important as money coming in timely from Loans and other borrowers.
If they hike FD to attract more customers, they will then loose a certain margin because they can't proportionately increase or recover by lending higher.
Then borrowers will go elsewhere.
So its unlikely that this FD increase is done to eyewash investors, they're also aware of such things.
FD rates in general have increased as base rates have been hiked, i'm just refering to the slight higher rate compared to competition.
A spike in cash flows in a Qtr is different as opposed to QoQ or YoY growth which are larger parameters for comparison.