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FDs offer fixed returns based on a given tenure. (Representative Image)
A fixed deposit (FD) is one of the most conventional and trusted avenues of investment. Despite falling interest rates, it is a preferred option for many since it is considered safe. FDs offer fixed returns based on a given tenure. You can choose a tenure from as short as seven days to as long as 10 years. FD interest rates of different banks vary according to deposit amount, deposit tenure and type of depositor. So, if you are planning to invest in a two-year FD, take a look at the top private sector banks offering the best interest rates.
Best rates
RBL Bank is offering 6.00% interest rates on fixed deposits for tenure of 12 months to less than 24 months to the general public. Senior citizens will get additional 0.50% interest for the same tenure. This rate is applicable from September 01, 2021.
IndusInd Bank is now offering 6% interest on deposits less than Rs 2 crore for the tenure of 1 year 7 months to below two years. But senior citizens will get 6.5% interest. This is applicable from July 23, 2021.
YES Bank is also offering 6% interest on term deposits of less than Rs 2 crore maturing within the next two years to the general public. Senior persons will get 6.50% interest for the same tenure. This rate is applicable from August 5, 2021.
Bandhan Bank is providing 5.50% interest rates on term deposits of less than Rs 2 crore maturing in less than 2 years to regular customers. But senior citizens will get 6.25% interest.
Other lenders
But if we go through the rates of the bigger public and private lenders, the interest rate is a bit low. The largest lender SBI offers 4.90% for tenure of less than two years to the general public.
On the other hand, HDFC Bank, the largest private sector bank in the country, is also offering the same interest rates.
Tax angle
Interest earned on a bank FD is fully taxable. It has to be reported as ‘income from other sources’ while filing I-T return. Interest earned over Rs 10,000 a year from FDs attracts 10% TDS if form 15 G/H has not been submitted.
Insurance
Bank deposits up to Rs 5 lakh are insured under the RBI’s Deposit Insurance and Credit Guarantee Corporation (DICGC).