Most of us keep
some money in saving banks account because of two reasons – it is safe and can
provide regular income via interest. It is also liquid and can be accessed in
times of need. However, the returns on savings bank are not high and may
not meet the regular income needs.
Banks offer
comparatively low rate in savings bank deposits which simply means that your
money is not growing at the right pace. Therefore, you need to think that how
you can earn more returns provided you are getting safety and guaranteed return
by keeping your money in banks only. Within the bank deposit space, a better
alternative is fixed deposits. Bank FDs are one of the safest
investment-cum-savings avenue which can help you get 7-9% return annually.
These days, you do not even need to go to the bank to open an FD, but can do it
online.
Adhil Shetty,
CEO, BankBazaar.com says that FD is an ideal investment option for an investor
who is looking at fixed and assured regular income. Also, the returns from FDs
are guaranteed and the FD itself can be used as collateral for loans. “FDs
should be looked at more as a savings product than an investment product. Net
of tax, the real return from fixed deposits tends to be lower than inflation at
most times. Hence, calling it a savings product is perhaps more appropriate,”
he said.
Returns on bank
FDs vary as per the tenure you opted to make your investments. Also, you can
avail tax benefit on a fixed deposit made for a minimum of 5 years. Any deposit
below the said tenure is not eligible for doing tax savings.
“As the name suggests,
the original amount invested in tax-free FDs up to Rs 1.5 Lakh is exempt from
taxation under section 80C. The tax-saving FDs are available to all public and
private sector banks. However, if you want to avail the tax benefits, you need to
invest in a 5-year deposit. So the amount remains locked for a period of 5
years. Most banks do not even allow partial withdrawals. Moreover, while the
principal is tax-free, the interest earned is still taxable. The interest rate,
while more than the SB interest, is much lower than the rate of inflation,”
said Shetty.
Here are some of thele
fixed deposit schemes offering returns at several intervals offered through
various banks.
Top FD rates offered by major banks
| Bank name | FD interest rate | Tenure |
| Axis Bank | 6.85% | 17 months to less than 18 months |
| HDFC Bank | 6.75% | 1 year to 1 year 3 days |
| ICICI Bank | 6.75% | 1–2 years |
| Bank of Baroda | 6.65% | 1 year to 400 days |
| Punjab National Bank | 6.60% | 1 year |
| Bank of India | 6.60% | 1 year to less than 2 years |
| State Bank of India | 6.25% | 46 days to less than 2 years |
| Source: Paisabazaar.com | ||
Top FD rates offered by other banks
| Bank name | FD interest rate | Tenure |
| IDFC Bank | 7.50% | 366 days |
| RBL Bank | 7.20% | 2 year to less than 3 years |
| Bandhan Bank | 7.15% | 1 year to less than 2 years |
| DCB Bank | 7.10% | 3–5 years |
| Yes Bank | 7.00% | 3 years 10 Days to 3 years 20 Days |
| Source: Paisabazaar.com | ||
Top FD rates offered by small finance banks
| Bank name | FD interest rate | Tenure |
| ESAF Small Finance Bank | 9.00% | Above 1 year to 2 years |
| Fincare Small Finance Bank | 9.00% | Above 2 years to 3 years |
| Suryodyay Small Finance Bank | 8.75% | Above 2 years to 3 years |
| Utkarsh Small Finance Bank | 8.00% | 1 year to less than 2 years |
| Ujjivan Small Finance Bank | 8.00% | 1 year to 2 years |
| Source: Paisabazaar.com | ||
Source: Moneycontrol
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