Fixed Deposit (FD) schemes have traditionally been one of the most popular investment channels in India. The liquidity, security, and assurance of substantial returns offered by an FD has made this mode of investment one of the top choices of the salaried class here you go how to get the best Interest rates for Fixed Deposit in India.
Most banks and non-banking financial companies (NBFCs) have devised various types of FD schemes to cater to the needs of customers. These are governed by the norms laid down by the Reserve Bank of India (RBI).
Investment in FD
Before you decide to invest in an FD, you should check your motivation to invest. This effectively means that you should assess your individual financial goals. So are you keen on saving taxes? Do you require a regular flow of income? Or would a lump sum amount do? The answers to these questions will help you determine the type of fixed deposit scheme in India you should be investing in. Then you can analyse the interest rates offered by different banks.
Types of Fixed Deposit Schemes in India
Once you identify your financial goal, you should understand how the fixed deposit schemes available in India work. Some of the most common FD schemes are as follows:
- Standard Fixed Deposit – This is the most popular fixed deposit scheme in the country. Here, the customer deposits a certain amount of cash in the account for a specific tenure. The account holder earns interest at a predefined rate on the deposited principal amount. The interest that is earned on this FD scheme is significantly higher than the interest on a savings account, if a longer tenure is opted for.
The ideal scenario would be to leave the FD till maturity, so that you receive the promised value as a lump sum payout. However, you have the option to break the FD in an emergency. You will have to bear a penalty of 0.5% to 1.0% on the interest rate for the same.
- Flexi Fixed Deposit – In this type of FD scheme, the fixed deposit account is linked to the savings bank account. The account holder can transfer money between the FD and the savings account. This is a very convenient scheme for individuals who make regular transactions. The account holder can deposit money into the FD account to earn interest at a higher rate. He/she can also take out a percentage of this deposit for personal use, without incurring any losses. This type of FD, hence, offers a greater amount of liquidity and also enables a customer to enjoy the high interest rate of the FD account.
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- Tax Saving Fixed Deposit – In this type of FD, you can enjoy tax deductions of up to Rs.1,50,000 each year, as per Section 80C of the Income Tax Act. But you will have to lock your money in the FD for 5 years. This deposit cannot be broken before it matures. You cannot request for loans or avail overdraft facility on this deposit. The interest earned on this FD is taxable under the income tax slab that you fall under.
A customer can invest in any of the above FD schemes based on his/her personal preferences and financial goals.
Fixed Deposit Interest Rates
FD interest rates offered by banks vary from time to time. The interest rates are also largely dependent on the FD tenure. Banks offer FD rates based on the liquidity in the market and RBI policies as well. However, the rates will not be the same across all banks.
Banks occasionally offer special schemes with higher interest rates for select maturities. Differential rates are also offered on high value deposits between Rs.1 crore and Rs.5 crore. It is optimum to compare the interest rates of FDs across various banks at neutral financial websites that offer this facility. This way you will be able to narrow down on a scheme that suits your financial requirements.
Comparison of FD rates across India
The interest rates on fixed deposits across various banks in the country, as on May 2017, are tabulated below:
|Bank||General Rates||Senior Citizen Rates|
|SBI||5.50% to 6.90%||6% to 7.40%|
|HDFC Bank||3.50% to 6.95%||4.00% to 7.45%|
|ICICI Bank||4.00% to 7.00%||4.50% to 7.50%|
|Axis Bank||3.50% to 7.10%||3.50% to 7.60%|
|Kotak Bank||3.50% to 7.00%||4.00% to 7.50%|
|IDFC Bank||4.00% to 7.50%||4.50% to 8.00%|
|Bank of Baroda||4.50% to 6.90%||4.50% to 7.40%|
|Corporation Bank||5.00% to 6.60%||5.50% to 7.10%|
|IDBI Bank||4.25% to 6.40%||4.25% to 7.10%|
|Indian Bank||4.00% to 6.50%||4.50% to 7.00%|
|Indian Overseas Bank||4.00% to 6.75%||4.50% to 7.25%|
|OBC||4.00% to 6.85%||–|
|PNB||4.25% to 6.90%||4.75% to 7.40%|
|SBBJ||5.50% to 6.90%||6.00% to 7.40%|
|Syndicate Bank||4.75% to 6.80%||5.25% to 7.30%|
|Allahabad Bank||4.50% to 6.90%||–|
|Andhra Bank||4.00% to 6.85%||4.50% to 7.35%|
|Bank of India||4.00% to 6.90%||4.00% to 7.40%|
|Bank of Maharashtra||4.25% to 6.50%||4.25% to 7.00%|
|Canara Bank||4.20% to 6.90%||4.70% to 7.40%|
|Central Bank of India||4.75% to 6.60%||–|
|Dena Bank||4.50% to 7.00%||5.00% to 7.50%|
|Punjab and Sind Bank||4.00% to 7.00%||4.00% to 7.50%|
|State Bank of Hyderabad||5.50% to 6.90%||6.00% to 7.40%|
|State Bank of Mysore||5.50% to 6.90%||6.00% to 7.40%|
|State Bank of Patiala||5.50% to 6.90%||6.00% to 7.40%|
|State Bank of Travancore||5.50% to 7.00%||6.00% to 7.50%|
|UCO Bank||4.50% to 6.75%||–|
|Union Bank of India||5.00% to 7.00%||5.50% to 7.50%|
|Vijaya Bank||4.00% to 6.50%||4.50% to 7.00%|
|United Bank of India||4.00% to 6.25%||4.00% to 6.75%|
|Lakshmi Vilas Bank||4.50% to 7.00%||4.50% to 7.50%|
|Deutsche Bank||4.00% to 8.00%||4.00% to 8.25%|
|Citibank||3.00% to 5.75%||3.50% to 6.25%|
|HSBC Bank||3.15% to 6.50%||3.65% to 7.00%|
|Jalgaon Janata Sahakari Bank Ltd||5.00% to 7.50%||5.00% to 7.75%|
|South Indian Bank||4.00% to 6.75%||4.50% to 7.25%|
|Development Credit Bank||4.00% to 7.25%||4.50% to 7.75%|
|LIC Housing Finance||7.30% to 7.50%||7.55% to 7.75%|
|Almora Urban Cooperative Bank||4.00% to 7.65%||4.50% to 8.15%|
|KarurVysya Bank||5.00% to 7.00%||5.00% to 7.50%|
|Yes Bank||5.75% to 7.15%||6.25% to 7.65%|
|JanasevaSahakari Bank Borivli||4.00% to 8.50%||4.00% to 9.00%|
|DBS Bank||4.00% to 6.70%||4.00% to 6.70%|
|Abhyudaya Cooperative Bank||6.00% to 7.50%||6.00% to 7.75%|
|RBL Bank||5.00% to 7.65%||5.50% to 8.15%|
|DhanLaxmi Bank||4.00% to 6.75%||4.00% to 7.25%|
|HDFC||7.40% to 7.40%||7.65% to 7.65%|
|Catholic Syrian Bank||3.50% to 6.75%||–|
|Kapol Cooperative Bank LTD||5.00% to 8.00%||5.00% to 8.25%|
|City Union Bank||6.25% to 7.10%||6.25% to 7.50%|
|JanakalyanSahakari Bank Ltd||4.25% to 8.00%||4.25% to 8.25%|
|PNB Housing Finance||7.25% to 7.25%||7.50% to 7.50%|
|Ahmedabad Mercantile Cooperative Bank||4.50% to 7.25%||5.00% to 7.75%|
|Nainital Bank||4.00% to 7.90%||4.50% to 8.40%|
|Karnataka Bank||3.50% to 7.10%||4.00% to 7.60%|
|Tamilnad Mercantile Bank||5.00% to 7.00%||5.00% to 7.50%|
|Standard Chartered Bank||4.25% to 7.00%||5.25% to 7.50%|
|Federal Bank||3.50% to 6.80%||4.00% to 7.30%|
|Bandhan Bank||3.50% to 7.70%||4.00% to 8.20%|
|Kalyan Janata Sahakari Bank||4.50% to 8.25%||4.75% to 8.75%|
|IndusInd Bank||4.00% to 7.15%||4.50% to 7.65%|
|Jammu And Kashmir Bank||5.00% to 6.75%||5.50% to 7.25%|
|DHFL||7.75% to 8.00%||8.25% to 8.50%|
|Akola Janata Commercial Cooperative Bank||4.00% to 7.50%||4.00% to 8.00%|
Interest on senior citizen FDs are usually higher than general FDs. Senior citizens will have to submit proof of their age to avail this benefit when opening an FD account. Other features of senior citizen FDs are as follows:
- The applicant should be 60 years of age or more to be able to open a senior citizen FD.
- The tenure of these FDs are usually between 7 days and 10 years.
- Loans can be taken against senior citizen FDs.
- In the event of premature withdrawal of an FD, penalties are charged.
In conclusion, although the rates on FDs have declined slightly in the recent past, it still remains a popular investment option. The popularity of FDs have only increased post the recent demonetization exercise, as people are exploring options to park the extra funds accumulated in their savings accounts.