A fixed deposit (FD) is one of the safest investment options that offers a fixed return. It is still a preferred choice of investments for many middle-class Indians as it has negligible market-related risks and offers higher interest rates than a savings account.
In an FD, the account holder can deposit a specific amount for a fixed tenure.
It is a bitter truth that even during the second wave of Covid-19 interest rates on FDs are going down. In the last few weeks various major commercial banks, including HDFC Bank, Bank of India, Yes Bank, IndusInd Bank and Bandhan Bank reviewed their interest rates on FDs.
This poses a big challenge for those whose income depends on FD interest rates.
There are some banks that offer attractive rates on fixed deposits. Smaller private banks and small finance banks offer relatively higher rates. Banks are offering up to 6.10% interest on one-year fixed deposits. Banks offer additional 0.50-0.75% interest for senior citizens than the general public.
If you compare the interest rate on 1 year FD, you can see mostly smaller banks are dominating the top positions on the list. This interest varies from one bank to another.
RBL Bank offers 6.10% interest on 1 year FD to general customers. Senior citizens can get 6.60% interest on the same tenure. This private sector bank on May 17, 2021 revised its rates. Before that, the interest rate was 6.50% for general in the same tenure.
IndusInd Bank recently slashed its interest on 1-year FD from 6.50% to 6%, which is second highest, in the latest revision, which is applicable from June 4, 2021. Senior citizens can get an additional 0.50% interest.
Yes Bank also revised interest rates on different term deposits. Now they are offering 6% interest to the general public on one-year FD. New rates came into effect from June 3, 2021. Before that the interest rate was 6.25%.
DCB Bank is in fourth place in the list. Now they are offering 5.80% interest on 1-year FDs. Bandhan Bank in the fifth place with the interest rate of 5.50% on 1-year FDs.
Public sector banks such as Union Bank of India (UBI) and Bank of India (BoI) offer 5.25% interest on their one-year FDs.
Interest rate on one-year FDs in both Canara Bank and Punjab & Sind Bank is 5.20%. Interest rate on one year FD in Indian Overseas Bank (IOB) is 4.90%.
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