Interest rates on post office are set to be cut according to news reports. With instruments like PPF, giving you an interest rate of as much as 8.7 per cent, it is very difficult for investors to place money in bank deposits, whose interest rates are much lower.

Many bankers have said that they cannot slash interest rates on loans, because interest rates on deposits has to be kept elevated, to compete with post office or as one calls it small saving schemes.

The government now seems to be concerned and has decided it may cut interest rates on small savings schemes. When that happens you may start getting lower interest on all kinds of fixed deposits. Here are a few fixed deposits, you can place your money in before interest rates fall.

Ratnakar Bank Fixed Deposit

For a period of two years, the best bet would be the bank fixed deposit of Ratnakar Bank. The bank offers an interest rate of 9 per cent on a two year fixed deposit. This is amongst the best among the banking fixed deposits, if you exclude the cooperative banks. The 36 month deposit at the bank gives you an interest rate of 8.75 per cent.

This is still better than small saving schemes of the post office, whose interest rates are expected to be slashed even further.

DHFL Ashray

These fixed deposits are rated by CARE with a "AAA" rating and BWR has accorded a rating of "AAA" as well. A 40-month deposit offers an interest rate of 9.10 per cent by DHFL. Senior citizens are offered an additional interest rate of 0.25 per cent.

The yield can go exceedingly high on these deposits. The one good thing is that you are locking money for longer term, so you should not worry of interest rates falling.

The interest rates on 14 month, 24 month and 36 month is 9 per cent.

DCB Bank

Like most other banks, DCB Bank has reduced interest rates on bank deposits in the last one year. The bank offers an interest rate of 8.20 per cent for tenures ranging from 24-36 months. The yield on these deposits works out to more than 9 per cent, which can be considered as excellent, in a falling interest rate regime.

Conclusion

It is difficult for most individuals who depend on fixed income to get decent yields these days. The above can give decent returns over a slightly longer tenure. Go for longer term tenures, as you are hedging against falling interest rates.
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