Question

People have to pay high interest on loan and interest received on fixed deposit why do you think this is so

Answer 1

Its based on demand and supply and what Bank think the future rates would be. Today Banks in India have a liquidity crunch as the Repo Rates by Reserve Bank of India [Central Bank] are high.
Bank want to encourage more people to deposit money and hence are offering higher rates. Banks also believe that once the Inflation is under control, the Central Bank would ease the repo rates. This is likely to happen in a years time. Hence Banks one year down want to lower the Fixed Deposit rates. So essentially they would be at loss if they give higher rates for longer periods.
So they are offering the highest rates for a period of year which motivates more people to invest for a year, even if they want to stay invested for long.