5 Best Small Finance Banks With The Highest Interest Rates

Interest rates on fixed deposits have fallen drastically in last one year after the RBI's back to back key policy rate cut. While this has come as a delight for borrowers, investors in deposits have been hit hard. And somebody who is risk averse and cannot afford to hold market-linked instruments in his or her portfolio still prefers to keep their investible surplus in fixed deposits.

Now, some of the prominent names including the likes of SBI, ICICI Bank, HDFC Bank and Bank of Baroda are fetching interest rate in the range of just 4.9% to maximum 6.3% for a tenure of 1 year to maximum 10 years. Notably, the highest interest rate of around 6 percent is being extended to senior citizen category who in the wake of Covid 19 are getting 0.3 percent extra over and above 0.5 percent that is given out to senior citizens for booking FDs of a tenure between 5 and 10 years. These special senior FD schemes have a validity until the end of this year.

But in case such returns from well-known banks do not convince you, you can go for Small Finance Banks that offer a relatively higher rate of return with the same protection that is available to a depositor in a large commercial bank. Here are listed top 5 SFBs offering the highest interest rate on fixed deposits of less than Rs. 2 crore across tenure.

Small Finance Bank offering highest rate on 1-year FD tenure

 

Small Finance Bank	1-year tenure  (p.a)	Senior Citizens (p.a)
Equitas Small Finance Bank	7.10%	7.7% ( 0.6% extra for seniors)
Jana Small Finance Bank	6.90%	7.40%
Suryoday Small Finance Bank	6.75%	7.25%
Fincare Small Finance Bank	6.50%	7.00%
Ujjivan Small Finance Bank	6.50%	7.00%

Here notably, Equitas Small Finance Bank offers a higher rate of 0.6 percent to its senior citizen customers. So, on a 1-year FD at these SFBs one can get a higher return of up to 7.1% which is a whopping 2% higher than FD returns at large banks.

Small Finance Bank offering highest rate on 3-year FD tenure

 

Small Finance Bank	3-year tenure  (p.a)	Senior Citizens (p.a)
Jana Small Finance Bank	7.50%	8.00%
Equitas Small Finance Bank	7.15%	7.75%
Suryoday Small Finance Bank	7.15%	7.65%
Fincare Small Finance Bank	6.90%	7.40%
Ujjivan Small Finance Bank	6.05%	6.55%

For a 3-year tenure, Jana Small Finance Bank offers the highest rate of 8% to its senior citizen customers and for its other customers it offers a rate of 7.5% per annum.

Small Finance Bank offering highest rate on 5-year FD tenure

 

Small Finance Bank	5-year tenure  (p.a)	Senior Citizens (p.a)
Suryoday Small Finance Bank	7.50%	8.00%
Jana Small Finance Bank	7.00%	7.50%
Equitas Small Finance Bank	6.75%	7.35%
Fincare Small Finance Bank	6.00%	6.50%
Ujjivan Small Finance Bank	5.80%	6.30%

And so for a higher return or interest rate of up to 8% on FDs across tenures, investors can surely park their funds in these Small Finance Banks without doubting on the credibility of these banks which are also governed by RBI regulations. Further depositors in these banks are insured for a maximum of Rs. 5 lakh for both principal and interest amount under the Deposit Insurance and Credit Guarantee Corporation (DICGC). And so even if the bank goes bust, investors' interest up to Rs. 5 lakh will be protected.

GoodReturns.in