While many individuals define short term as a period less than a year, short term could mean different periods for different individuals. For some it could mean 30 days, while for others it could be as high as three years.
State Bank of Bikaner and Jaipur Bank Deposit
Select banks like State Bank of Bikaner and Jaipur is offering individuals an excellent rate of interest for short term deposits. It's 91 days and up to 179 days deposit attracts an interest rate of 8 per cent, while the 180 days to less then one year deposit attracts an interest rate of 8.7 percent. This should easily be amongst the highest from public sector banks.
Yes Bank Savings Account at 7 per cent
The Yes Bank Savings Accounts comes with an interest rate of 7 per cent per annum. So, the period does not matter and as long as you have large balances you are likely to fetch an excellent interest rate on your balances in the savings account. The one good thing about the account is that you need not keep it fix for a certain period and still attract a huge interest rate of 7 per cent. Importantly, interest income in savings account up to Rs 10,000 per year is exempt from tax.
Canara Bank Fixed Deposits
Canara Bank offers an interest rate of 8.5 per cent on a 270 days to less than 1 year deposit. This is good for those looking at blocking money anywhere between 6 months to one year. High on safety because the bank is a government owned entity. Interest income on fixed deposit attracts income tax.
There are certain bond funds that can also offer you super returns in the short term. These include the IDFC Dynamic Bond fund and the IDFC Bond Fund. Of course, unlike bank deposits there is no guarantee on the returns and one would do well to consult a mutual fund expert before one invests in such fund.
Kotak Mahindra Bank Savings Account
Balance in a Kotak Mahindra Savings Account will attract an interest rate of 6 per cent. This should be good option if you are used to maintaining a large balance in your savings account most of the time. Of course, it still does not beat the 7 per cent interest rates offered by Yes Bank on its savings account.
Ultra Short Term Bond Funds
Ultra Short Term Bond Funds also have the ability to offer good returns. They can offer returns of as high as 9 per cent, but that again would depend on conditions in the market.