Equitas Small Finance Bank is offering an interest rate of 7.35 per cent on its deposits for 888 days. This is much higher than government owned banks, where you would be fortunate to get even 5.5 per cent. The big private players are also offering an interest rate around the 5 per cent mark. Take a look at what Equitas Small Finance Bank is offering over various tenures:
Interest rates from Equitas Small Finance Bank
|1 year to 18 months||7.10%|
|18 months 1 day to 2 years||7.29%|
|889 days to 3 years||7.15%|
|3 to 10 years||6.75%|
Is it safe to invest in Equitas Small Finance Bank Fixed Deposits?
Small Finance Bank are not like full fledged commercial banks, in the sense they have restricted activities. For example, they they do not issue credit cards. However, they are governed by the Reserve Bank of India. So, there are regulatory and other statutory compliances that they have to adhere to. The Reserve Bank of India does not issue licences and it has been issued at one go, just like commercial banks in the country.
These banks also have to adhere to other requirements like networth criteria, maintenance of cash reserve ratio etc., which helps to make them safer. Since they are governed by the Reserve Bank of India to that extent they are safe and much better than the smaller cooperative banks.
Deposits are insured?
Another factor to consider is that the Deposit Insurance and Credit Guarantee Corporation insures fixed deposits and it is a RBI corporation. While earlier, deposits were insured to the extent of Rs 2 lakhs, the same has been now enhanced to Rs 5 lakhs. So, if you have deposits aggregating up to Rs 5 lakhs, the same is safe.
The total amount of deposits insured is taken into account across all branches and includes balances in the savings account. Having said that we must not forget that to get the insured money back can always be a cumbersome process. Our advise would therefore be to place smaller deposits and not large deposits, though we do not see great risks at the moment. With interest rates having fallen across the board it has become extremely difficult for individuals to generate returns and investors are tempted to chase yields at the moment.
About the author
Sunil Fernandes has spent 25 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.