Over the last one and a half years, interest rates on fixed-income investments have dropped sharply in India, with bank FD rates dropping to their lowest point in years. That being said, compared with their counterparts, there are some lenders that still bid even higher interest rates on fixed deposits. A handful of banks, such as Yes Bank and IndusInd Bank, are now bidding returns of up to 7%. Though Yes Bank's FD rates for a maturity period of two-three years were 7 per cent, Whereas IndusInd Bank bidding 7 per cent for periods of 1 to 2 years and 2 to 3 years. Remember that the interest rates of these banks are only applicable for a deposit amount of up to Rs 1 crore. Interestingly, the Tamil Nadu-based Lakshmi Vilas Bank bid 6-7 per cent interest on its bank FDs for a one-two year term. Opposed to this for deposits of up to Rs 1 Crore, some of the largest banks such as State Bank of India, HDFC Bank and ICICI Bank bid rates in the range of 4.9-5 per cent for the period of one-two years.
|Banks||6 months to < 1 Year||1 to < 2 Years||2 to < 3 Years||3 to < 5 Years||5 Years and above|
|IndusInd Bank||5 to 6.15%||7.00%||7.00%||6.75%||6.65 to 6.75%|
|Yes Bank||5.50 to 5.75%||6.75%||7.00%||6.50%||6.50%|
|DCB Bank||6.35%||6.5 to 6.90%||6.8 to 6.9%||6.95%||6.95%|
|RBL Bank||5.25 to 6.10%||6.75%||6.75%||6.5 to 6.95%||6.50%|
|Lakhsmi Vilas Bank||5.50 to 5.70%||6.00 to 7.00%||6.00%||6.00%||6.00%|
|Bandhan Bank||5.75%||5.75 to 6.00%||6.00%||5.75%||5.75%|
|IDFC First Bank||4.50 to 5.25%||5.75 to 6.00%||5.75%||5.75%||5.75%|
|Tamilnad Mercantile Bank||5.25%||5.75%||5.65%||5.50%||5.50%|
|Karur Vysya Bank||4.75 to 5.00%||5.50%||5.50%||5.65%||5.65 to 6.00%|
|Karnataka Bank||5,30%||5.40%||5.40 to 5.65%||5.65%||5.65 to 7.00%|
|Axis Bank||4.40 to 5.15%||5.10 to 5.25%||5.40%||5.40%||5.50%|
|South Indian Bank||5.00%||5.40%||5.40%||5.50%||5.50%|
|Nainital Bank||5.05 to 5.15%||5.25 to 5.35%||5.35%||5.35%||5.35 to 6.35%|
|Dhanlaxmi Bank||4.50%||5.25 to 5.30%||5.25 to 5.40%||5.40 to 5.50%||5.50 to 5.60%|
|State Bank of India||4.40%||4.90%||5.10%||5.30%||5.40%|
|ICICI Bank||3.50 to 4.40%||4.90 to 5.00%||5.00 to 5.15%||5.15 to 5.35%||5.35 to 5.50%|
Should You Invest?
It will be better if investors should before parking their capital, examine the overall performance of a financial institution. It will, however, be challenging for a general investor to inspect a bank's records. As a substitute, as far as FDs are important, stay with certain top banks. The tax variable should also be taken into consideration by investors, as FDs are not quite tax-efficient. For instance, if you get a 5 per cent return and are in the 20 per cent income tax slab, you may continue with a 4 per cent return from your FD, which, regarding high inflation, really isn't very valuable.
The enticement of bank FDs will persist considering certain drawbacks, as they have higher liquidity and end up coming with various maturity period alternatives. Particularly in the context of senior citizens who do not fall under higher tax slabs and want a simplified portfolio, a diversification of primarily a FD can make a smart decision for them. For investors with a low-risk appetite, bank FDs are a decent consideration but sticking with larger lenders or financial institutions with an acceptable track record is the secret.