It's probably the worst era in recent times in terms of interest rates for fixed deposit holders, with each quarter seeing a further drop in interest rates. It's extremely difficult to even get 4 to 5 per cent on even fixed deposits these days. However, there are a few banks that still do give you a slightly higher interest. Some of these banks are the full-fledged commercial banks, while others are the small finance banks. Here are 3 banks that offer you savings bank interest rate of up to 7%.
Equitas Small Finance Bank with 7%
Equitas Small Finance Bank offers an interest of 7% for balances above Rs 1 lakh. This probably is the highest amongst all banks in the country. The bank is offering a selfeSavings, which is a digital bank account which can be opened with a web based interactive video form by registering using Aadhaar & PAN. Interest of upto Rs 10,000 on the savings bank account is exempted from Income Tax in India.
Equitas Small Finance Bank as the name suggests is a small finance bank. These banks like full fledged commercial banks are regulated by the Reserve Bank of India. In terms of safety, we know that sums of upto Rs 5 lakhs in savings account and deposits have an insurance cover, through the Deposit Insurance and Credit Guarantee Corporation, which is a RBI subsidiary.
IndusInd Bank, unlike Equitas Small Finance Bank is a full fledged commercial bank. The Bank offers an interest rate of 6% on balances in the savings account of more than Rs 10 lakhs.
The one problem that we have with savings account interest rates is that banks keep changing the rates and hence you could lose. Unlike an FD, where you can lock-in money for a particular duration, in the case of savings account you can get caught if interest rates fall. Let's say you have Rs 10 lakhs and you have a choice of placing it in a FD with interest rate of 6.75%. However, you choose to keep in the savings account with 7% interest and if the bank decides to reduce the interest to 5% and FD rates also fall, you lose. IDFC First Bank was a few months ago offering interest rates on savings account of 7%. It has now reduced the same to 5%.
Jana Small Finance Bank
Jana Small Finance Bank is offering an interest rate of 6% on balances between Rs 1 lakh and upto 10 Lakhs. For balances of more than Rs 10 lakhs upto Rs 50 crores, the interest being offered is Rs 6.50%. If you have a balance of more than Rs 50 crores, the interest that is being offered is 6.75%.
Jana Small Finance Bank as the name suggests is a small finance bank and investors often ask about their safety. We cannot predict safety, all we can do is give you some information, telling you that there is an insurance guarantee for sums upto Rs 5 lakhs. The interest rates being offered on the savings bank account is as good as fixed deposits.
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, mutual funds and tax planning.