Small Finance Banks were granted a license from the Reserve Bank of India and are allowed to raise money from the public for deposits and savings account. Here are a few small finance banks that beat even bank deposits in terms of interest rates. They are relatively safe as they adhere to guidelines from the RBI and can help you generate higher returns than the conventional commercial deposit FDs.
Suryoday Small Finance Bank
This small finance bank offers an interest rate of 8.75 per cent on its 24 to 36 months deposit. This interest rate is exceptional given that government banks are presently offering an interest rate of just 6.0 to 6.5 per cent.
On a similar period of 12 to 24 months senior citizens can fetch an interest rate of 9.0 per cent.
The yields on these deposits can go as high as 9.61 per cent depending on the tenure of the deposits. Not a bad bet in an environment of falling interest rates.
Uttkarsh Small Finance Bank
This is another small finance bank that offers superlative interest rates on FDs. A deposit of one year to less than 2 years offers an interest rate of 8 per cent. A 2 years to less than three years deposit gives one an interest rate of 7.85 per cent, which is still way better than what banks offer in the country.
Here again senior citizens are entitled to an extra 0.50 per cent interest. Tax liability on these deposits are the same as in the case of deposits from commercial banks.
Ujjivan Small Finance Bank
This bank offers an interest rate of 8 per cent on a 1-2 year deposit. This is again a good 1-2 per cent higher than what most other banks in the country offer. Ujjivan received a license as a small finance bank from the Reserve Bank of India in November last year.
A two Years and one day to 3 Years deposit at the bank gives an interest rate of 7.50 per cent. It is important to note that there would be a tax liability as in the case of interest earned from fixed deposits.
AU Small Finance Bank
AU Small Finance Bank offers an interest rate of 7.25 per cent for 36 Months 1 Day to 60 Months deposit. This may not be the best when compared to some of the other small finance banks, but, is much better than what commercial banks in the country offer. The interest rate on the Airtel Bank savings account is almost similar to this. Also read: What are small finance banks here
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