Good morning [%first_name |Dear Reader%],

Welcome to another edition of Ka-Ching!

It’s a good time to be a fixed-income investor in India. 

The interest rate cycle has finally turned up over the past few months after having languished for years. And it started with the Reserve Bank of India’s (RBI) out-of-turn move back in May, when the central bank surprised the market with a 40 basis points hike in the repo rate, bringing it to 4.4%. 

Since then, the RBI has stepped harder on the gas, raising the repo rate thrice to 5.9% now. All of that in an effort to rein in inflation. That beast hasn’t exactly skulked away, so more rate hikes are being predicted by economists.

With the repo up, banks and financial institutions are wooing investors with pretty attractive interest rates. IDFC First Bank, for instance, is offering 7.25% for a 750-day deposit, home-loans lender HDFC is giving 7.5% for a 45-month tenure, while small finance bank Fincare is offering 7.75% for a 1,000-day deposit.

So I wouldn’t blame you for thinking a bank deposit or two would be the best way to go when it comes to asset allocation now.