Fixed deposits are among the most highly regarded investment instruments in our country due to their guaranteed returns, tenure flexibility, and high liquidity. They are widely the most preferred alternative of investment for risk-averse investors, such as senior citizens, who fixate on FDs to meet not only their financial objectives but also to live their post-retirement life peacefully. On April 7, 2021, the RBI kept the repo rate at 4.00 per cent and the reverse repo rate at 3.35 per cent, which has led to banks dropping their FD rates since the last year. Having said that, there are still a handful of banks promising higher interest rates to both the general public and senior citizens. Hence, if you want to meet your short-term goal here are the 1-2 year FD rates for top small finance and private sector banks for an amount of less than Rs 2 Cr. Senior citizens will get rates that are up to 50 basis points higher than the standard rates applicable to non-senior citizens.
1-2 Year FD Rates
|Small Finance Banks||ROI for non-senior citizens||ROI for senior citizens||W.e.f.|
|Jana Small Finance Bank||7.00%||7.50%||11.04.21|
|Suryoday Small Finance Bank||6.75%||7.25%||15.2.21|
|Ujjivan Small Finance Bank||6.50%||7.00%||5th March 2021|
|Equitas Small Finance Bank||6.40%||6.90%||25th Jan, 2021|
|AU Small Finance Bank||6.25%||6.75%||1 April 2021|
|Private Sector Banks||ROI for non-senior citizens||ROI for senior citizens||W.e.f.|
|DCB Bank||6.70%||7.20%||5th Feb, 2021|
|IndusInd Bank||6.50%||7.00%||26th April 2021|
|Yes Bank||6.25%||6.75%||8th Feb, 2021|
|RBL Bank||6.25%||6.75%||12th April 2021|
|The Tamil Nadu State Apex Co-operative Bank or TNSC Bank||6.00%||6.50%||09.12.2020|
|Source: Bank Websites|
Safety of fixed deposits
Fixed Deposits are a safer bet than other risky options since deposits up to Rs. 5 lakh are guaranteed by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India. Fixed deposit interest rates remain stable and unaffected by market fluctuations. This gives the investor mental peace because his or her returns are fixed and secure. As a result, the investor can easily estimate the amount he or she will get at the completion of the maturity period which will no doubt allow him or her to plan a financial preparation in a simplified manner. Fixed deposits are traditionally considered to be secure investments, but they are not completely secure if you are parking your money in an NBFC or Corporate. As a result, it is still best to choose a commercial bank FD since these deposits are DICGC-insured. Although cooperative banks, corporates, and NBFCs provide higher interest rates on fixed deposits it is best to say NO to them. If you want to invest in an NBFC fixed deposit, you should think about the company's financial stability and credit score.
Should you invest in fixed deposits?
Among risk-averse investors, especially senior citizens, bank fixed deposits (FDs) are one of the most common investment instruments. The deposit insurance scheme of DICGC, an RBI subsidiary, covers banks classified as scheduled banks. This insurance policy covers each depositor's cumulative deposits of up to Rs 5 lakh in fixed deposit, recurring deposit, current, and savings accounts for each scheduled bank in the event of bankruptcies. As a result, depositors pursuing the highest standard of capital security for their fixed deposits should check to see if the bank in question is a scheduled bank or not. The interest rate provided on a fixed deposit is determined by the deposit period and investment amount, as well as the type of investor i.e. non-senior citizens or senior citizens. You must also select the interest payment method here. Choose a non-cumulative interest payout if you want a regular income. For investors who do not need regular income, the cumulative interest alternative is preferable because banks often pay higher interest under this option. While FD rates have been slowly declining, investing in equity, debt instruments, and government-backed schemes is still preferable for creating wealth, there are certain instances where an FD might be the best option for you, such as guaranteed returns, tax benefits, loan option, and so on.