In their investment portfolio, multiple risk-averse investors prefer fixed deposits (FDs) to park their surplus money for short-term goals only because the returns are assured. Currently, due to the lower interest rates on fixed deposits across tenures, the general public and senior citizens are badly affected. But the good news for them is, some small private banks fetch higher interest rates compared to leading banks of India. For e.g., IndusInd Bank and Yes Bank provide 7 per cent interest, while RBL Bank fetch 6.85 per cent on one-year FDs. On the other end, some overseas banks such as Standard Chartered, DBS Bank and Deutsche Bank offer 6.30 per cent, 4.15 per cent and 4 per cent interest rates respectively on their one-year FDs.
The leading private sector banks in India, such as Axis Bank, HDFC Bank and ICICI Bank, fetch 5.15 per cent, 5.10 per cent and 5 per cent on their one-year FDs. Public sector banks like Bank of Baroda and the State Bank of India, offer 4.90 per cent return on 1-year FDs. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, guarantee deposits of up to Rs 5 lakh in fixed deposits. But apart from the higher interest rates, investors should also look at the minimum and maximum investment threshold on 1-year FDs. For private banks, the investment volume ranges from Rs 100 to Rs 10,000 and for overseas banks, it is Rs 1,000 to Rs 20,000 for a one-year FD respectively.
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If you've invested your capital in a bank, it's probably more than secure. That's because, for all banks, the Reserve Bank of India (RBI) has made deposit insurance mandatory. Under the Deposit Insurance and Credit Guarantee Corporation (DICGC) program, the deposit in a bank is guaranteed for both principal and interest return. So, even though the bank in which you have an FD goes bankrupt, your money is secure. Compared to bank fixed deposits, NBFCs and companies also offer a higher interest rate, which helps investors to conveniently increase their returns. However, it is better to evaluate the credibility scores in advance before you invest in a company FD. Banks fall into various groups in India, such as the private sector, public sector, cooperative banks and overseas banks. All of these banks provide FDs to the eligible investors, and all of them have deposit insurance coverage. Therefore, whichever sector you opt to park your surplus money, your investment and returns are equally secure.