Most banks in the country offer you an interest on savings account at 3 to 3.5 per cent. Even fixed deposits from government banks like State Bank are around that 5 per cent mark. Debt instruments are no longer attractive given the low interest rates that they currently offer. Here is a savings account that offers you a much higher interest rate:
7% Interest rate on the savings account of IDFC First
IDFC First Bank is offering an interest rate of 7% if your balance in the savings account is more than Rs 1 lakh. The interest rate is double of what other banks are offering, making the interest rate 100 per cent more than what other banks in the country are offering.
The balances under Rs 1 lakh entitle an investor to an interest rate of 6 per cent, which is again a very good interest rate.
The bank has also thrown in some offers like cash back on first online offline trasnaction through debit card of more than Rs 1,000. Fund transfer after adding a beneficiary also entitles one to a cash back.
Is it safe to open a savings account?
The deposits by IDFC First Bank are rated AAA by Crisil. This is the highest ratings and indicates that the deposits are secure. While this rating is for the deposits, we would assume that the financial condition is good to warrant such a rating.
However, banks like Yes Bank have run into problems, and hence one must be cautious. It's difficult to do gaze into the future and currently IDFC First Bank is relatively strong based on the quarterly results.
Quarterly results of IDFC First
For the quarter ending June 30, 2020, pre-operating profit of the bank grew 181% year-on-year and 13% quarter-on-quarter to Rs. 892 crore in Q1 FY21 as compared to Rs. 318 crore in Q1 FY20 and as compared to Rs. 787 crore in Q4 FY20.
CORE pre-operating profit (PPOP Net of treasury income), grew 69% YOY and 19% QOQ, to Rs. 555 crore in Q1 FY21 as compared to Rs. 328 crore in Q1 FY20 and as compared to Rs. 468 crore in Q4 FY20.
The bank's net NPA reduced sequentially from 0.94% as of March 31, 2020 to 0.51% as of June 30, 2020, which is rather good. Overall for the quarter ending June 30, 2020, the bank has done better. This makes it a pretty decent investment choice to open an account.
About the author:
Sunil Fernandes has spent 26 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, debt instruments, commodities mutual funds and tax planning.