Fixed Deposits is one of the safest forms of investment for risk-averse individuals. The FD's as it is popularly known amongst the people in India forms one of the traditional, secured, highly liquid, tax saving instrument and forms one of the well-known types of investment choice amongst all the sections of the society. Nowadays, most of the banks and financial institutions have slashed the fixed deposit rate of interest and hence the maturity value on these deposits have come down drastically since a decade.
But, a few banks and financial institutions in the country are still providing the best-fixed deposit rates to lure the customers to park their funds in their accounts. Having a fixed deposit promotes the habit of savings amongst individuals for securing the unforeseen future.
Before understanding in detail about the best-fixed deposits with higher interest rates, let's know the basic meaning and features of fixed deposit or FD's.
What is a Fixed Deposit?
A fixed deposit is a form of the financial instrument offered by banks and financial institutions or non-banking financial institutions. This account will be opened for a predetermined period by depositing a sum of money and hence the name fixed deposit account. Here, the deposited amount is fixed and is repayable only on maturity.
As it provides the investors with safety and decent interest rates, higher than the regular savings banks, it is one of the most popular forms of investments. Fixed deposits are also known as term deposits. Investors have an option to withdraw the money before maturity and they will be penalized accordingly for early withdrawal.
Features of Fixed Deposit
- Investors can deposit their money only once and further deposits have to be done with separate fresh accounts.
- Investors can earn a higher return on investment in case of fixed deposits.
- The tenure of the fixed deposits ranges between 7 days to 10 years.
- Fixed deposit interest rates vary based on the tenure of the deposit and also from one bank to another.
- A receipt will be given to the investor known as fixed deposit receipt which they will have to produce at the time of maturity to concerned officials.
- A matured fixed deposit can be renewed for a further period as per the requirements of the investor.
- Loan facility on fixed deposit can be availed.
1. PNB Housing Finance Limited
Registered as a Housing Finance Company, the PNB Housing Finance Limited was incorporated and commenced its operations way back on November 11, 1988. The PNB Housing is promoted by Punjab National Bank. With FAAA or Negative rating on fixed deposits by CRISIL, the PNB Housing Finance Limited is offering the best-fixed deposit currently with an interest rate of 8.15% for 60 - 84 months tenure.
Depositors have to compulsorily lock in for a minimum of 3 months post which there is a provision for premature cancellation of fixed deposits. The interest rates charged will be lower for such FD's than the initial interest rates agreed at the time of depositing the money.
Interest Rates for regular deposits (up to Rs 5 crore)
The interest rate on premature withdrawals will be:
• 4% per annum if withdrawal is made within 6 months from the date of deposit
• Interest will be paid 1% less than the fixed deposit interest rates applicable for which deposit was held if withdrawn after 6 months.
2. Bajaj Finserv
Started in April 2007 after de-merger of Bajaj Auto Limited, the Bajaj Finserv, provides an array of financial products ranging from wealth advisory, lending, insurance, credit cards, wallets and so on. Bajaj Finserv is providing the best-fixed deposit rates which enable to earn higher returns on investment. As one can also bank on benefits of the flexible period, easy online application processes, secured form of investment.
The fixed deposit of Bajaj finance has earned FAAA rating from CRISIL and MAAA rating from the Investment Information and Credit Rating Agency of India Limited (ICRA). Investors will earn an assured return at a better rate of interest at 8.10% per annum for 5 years, as compared to the fixed deposit post office which offers returns at 7.7% per annum upon investment for a 5-year tenure.
Please Note: Minimum amount of deposit is Rs 25,000 in Bajaj Finserv.
Fixed Deposits Interest Rates with Bajaj Finserv
3. IDFC First Bank
Earlier known as IDFC Bank, the IDFC Bank and Capital First (a non-bank financial company) merged on December 2018 and renamed itself as IDFC First Bank. The IDFC Banks offers best-fixed deposit interest rates 2020 amongst the host of Indian banks with an interest rate of 7.50% per annum for deposits which are held for a tenure of 500 days.
Senior Citizens will get an additional spread of 0.50% over the existing interest rates for the set tenure.
A penalty in case of pre-mature closure a penalty of 1% will be charged. The premature closure of fixed deposits by senior citizens owing to the death of the account holder will be exempted from penalizing.
Fixed Deposits Interest Rates with IDFC First Bank (less than Rs 2 crore)
|181 days - < 1 year||7.00%|
|1 year-499 days||7.25%|
|501 days-10 years||7.25%|
4. Axis Bank
One of the leading private sector banks in India - Axis Bank also provides higher interest rates on its fixed deposits to its customers. The interest rates on fixed deposit Axis Bank stands at 6.50% per annum for a period between 18 months to 10 years. The interest rates are better at Axis compared to the fixed deposit interest rates in SBI which offer a maximum return of 6.10% per annum on the initial investment.
Fixed Deposits Interest Rates with Axis Bank (below Rs 2 crore)
|46 days-less than 6 months||5.40%|
|6-less than 9 months||5.80%|
|9-less than 11 months 25 days||6.05%|
|11 months 25 days-<18 months||6.40%|
|18 months - 10 years||6.50%|
5. HDFC Bank
Designated as the largest bank in the country in terms of market capitalization as of February 2016, the HDFC Bank is one of the largest private sector lender in terms of assets. Initiated in 1994, the bank has a wide network of branches of over 5500 spread across length and breadth of India.
The best interest rate based fixed deposit HDFC comes in for 2 years 1 day to 3 years with a maturity benefit of 6.40% return per annum.
Fixed Deposits Interest Rates with HDFC Bank (below Rs 2 crore)
|46 days -6 months||5.40%|
|6 months 1 day - 9 month||5.80%|
|9 months 1 day - < 1 year||6.05%|
|2 years 1 day - 3 years||6.40%|
|3 year 1 day - 10 years||6.30%|
About the Author
Archana has been covering investment planning and personal finance for more than two years.