Interest rate on bank fixed deposits have taken a hit in recent time in tandem with the huge repo rate cut that the country's central bank Reserve Bank of India has gone for amid economic uncertainty posed by the coronavirus pandemic. And every now and then we are seeing top lenders revise their FD rates downwards, leaving fixed income investor class worried.
While there are other fixed income investment options that command a higher return than bank fixed deposits such as company or corporate fixed deposits or even FDs at Small Finance Banks that with the key objective of financial inclusion are giving out a higher return, most people are comfortable investing with renowned names.
So, here is the low-down on the interest rates being offered by top banks in the country on FDs maturing in 1-2 years and where senior citizens will be better off i.e. reap highest interest rate for the said tenure when rates are now sub 5% mark:
1. Axis Bank:
As per the latest rates that come into effect from November 13, 2020, interest rate are as though. Senior citizens get an additional rate of 0.5% so a maximum interest rate of 5.9% can be secured by parking in FDs with 1-2 year at Axis Bank by senior citizens.
|Tenure||On deposits less than Rs. 2 crore (% per annum)|
|1 year < 1 year 5 days||5.15|
|1 year 5 days < 18 months||5.10|
|18 months < 2 years||5.25|
|2 years < 30 months||5.40|
SBI on term deposits worth less than Rs. 2 crore with a maturity term of 1 year to less than 2 year is offering an interest rate of 4.9% per annum. While for FDs with tenure of 2 years is giving away a return of 5.1% per annum.
So, with a higher additional rate of 0.5% over and above the rate given out to general public, senior citizens can get at max 5.6% per annum by parking FDs with SBI for a 1-2 year tenure.
3. Punjab National Bank:
1 year FD at PNB is offering a comparatively higher interest rate of 5.2%. And the rate of interest is the same for FDs with a maturity timeframe of between 1 year and 2 years.
Furthermore, unlike other banks, senior citizens when they book FDs with PNB are eligible for an additional rate of interest of 75 bps over applicable card rates for all maturities on domestic deposits of less than Rs. 2 Crore. So, the return for them on a 1-2 year FD shall be 5.95%.
4. Union Bank of India:
FD at Union Bank for tenure between 1 year and up to 2 years will be fetching a return of 5.25% per annum. For senior citizens, the additional rate of interest of 0.5% is given, so the effective rate of interest for them for a 1-2 year tenure shall be 5.75%.
So, taking into account the above listed banks in India, for a 1 year FD, Union Bank of India as per the latest rate fetched from individual bank's website as on November 17, 2020 offers the highest rate of 5.25% to general public. And for FDs maturing after 1 year and up to 2 years, the rate is the highest with Axis Bank that for an FD maturing in 2 years offers 5.4% rate per annum.
While for senior citizens, PNB offers the highest return of 5.95% per annum on fixed deposits placed for tenure between 1 and 2 years.