3 Small Finance Banks Offering More Than 7% Returns On 1 - 2 Year Fixed Deposits

The Reserve Bank of India (RBI) opted to continue to keep the repo and reverse repo rates the same as it was in its bi-monthly monetary policy meeting on February 10, 2022, following which several leading banks, including SBI, HDFC, IndusInd Bank, UCO Bank, Central Bank of India, IDBI Bank, Federal Bank, Kotak Mahindra Bank, and Karur Vysya Bank, have already begun hiking their interest rates. The upward rise of the interest rate cycle is a favourable indication for fixed deposit investors because banks are unlikely to cut interest rates any further. As a result, investors should begin investing in fixed deposits, but only for the short or medium term, as banks usually hike interest rates on short to medium FDs first and not on long-term deposits. That seems to be, locking in your deposit for the long term will not be advantageous because withdrawing to make a fresh deposit when short- to medium-term rates rise may result in an unwelcome penalty. So, for investors wishing to invest in fixed deposits for the near term, we have selected three small finance banks that give more than 7% inflation-beating returns for senior citizens on fixed deposits of less than Rs 2 Cr maturing in 1 to 2 years.

Note: For clarity, interest rates on 1 to 2 year fixed deposits are highlighted in bold. The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures all of these deposits up to a limit of Rs five lakhs on both the principal and interest amount.

Jana Small Finance Bank

On the 11th of January 2022, this small finance bank updated its interest rates on fixed deposits, after which the bank is now giving an interest rate of 6.75 percent to the general public and 7.55 percent to senior citizens on term deposits maturing in 1 to 2 years. The current interest rates on fixed deposits of less than Rs 2 Cr offered by the bank are mentioned below.

Tenure	Regular FD Interest Rate (p.a.)	Senior Citizen FD Interest Rate (p.a.)
7-14 days	2.50%	3.30%
15-60 days	3.00%	3.80%
61-90 days	3.75%	4.55%
91-180 days	4.50%	5.30%
181-364 days	5.50%	6.30%
1 Year [365 Days]	6.75%	7.55%
> 1 Year - 2 Years	6.75%	7.55%
>2 Years - 3 Years	6.75%	7.55%
> 3 Year - < 5 Years	6.75%	7.55%
5 Years [1825 Days]	6.75%	7.55%
> 5 Years - 10 Years	6.00%	6.80%
Source: Bank Website

North East Small Finance Bank

North East Small Finance Bank's fixed deposit interest rates were last updated on January 27, 2022. The bank is currently giving a 6.75 percent interest rate to the general public and a 7.25 percent interest rate to senior citizens on fixed deposits of less than Rs 2 crore maturing in 1 to 2 years, as shown in the table below.

Tenure	Regular FD Interest Rate (p.a.)	Senior Citizen FD Interest Rate (p.a.)
7 - 14 Days	3	3.5
15 - 29 Days	3	3.5
30 - 45 Days	3	3.5
46 - 90 Days	3.5	4
91 - 180 Days	4	4.5
181 - 365 Days	5	5.5
366 - 729 Days	6.75	7.25
730 - 1095 Days	6.75	7.25
777 Days	7	7.5
1096 - 1825 Days	6.5	7
1826 - 3650 Days	6.25	6.75
Source: Bank Website

Ujjivan Small Finance Bank

Ujjivan Small Finance Bank provides a specific fixed deposit scheme named 'Platina Fixed Deposit'. This scheme is a retail non-callable deposit product that does not allow for part or pre-closure. This scheme can be registered for a deposit duration of a minimum of 12 months to a maximum of 60 months by depositing a minimum of Rs.20 Lakhs and a maximum of Rs.2 Crs. On this scheme, the bank is now paying an interest rate of 6.65 percent to 6.75 percent to the general public and 7.40 percent to 7.50 percent to senior citizens on deposits maturing in 1 to 2 years. These rates are in effect as of January 7, 2022.

Tenure	Regular FD Interest Rate (p.a.)	Senior Citizen FD Interest Rate (p.a.)
12 Months	6.65%	7.40%
12 Months and 1 Day to 19 Months	6.15%	6.90%
19 Months and 1 Day to 24 Months	6.75%	7.50%
24 Months and 1 Day to 989 Days	6.65%	7.40%
990 Days	6.90%	7.65%
991 Days to 36 Months	6.65%	7.40%
3 Years and 1 Day to 5 Years	6.40%	7.15%
Source: Bank Website