A recent announcement in the Union Budget has made small banks much more attractive. With the hike in the deposit insurance limit to Rs. 5 lakh from April 1, it has become much safer to hold deposits with small banks.
Small banks tend to offer higher interest rates on deposits compared to larger banks. The trade-off for the customer is that they can earn higher returns on their deposits by taking a chance on upcoming banks.
The highest interest rates on FDs offered by government banks are in the 6.5% range. The highest rates offered by large-sized private banks are in the 7.5% range. However, select smaller private banks are still offering rates up to 9%.
Here’s a quick look at interest rates on select tenors from some well-known small finance banks.
|Bank||<1 Year||>=1 to <=2||2 to <=3||3 to <=5||W.E.F|
|AU Small Finance Bank||7||7.63||7.77||7.5||NA|
|Equitas Small Finance Bank||7.5||8||8.25||7||02-Dec-19|
|Fincare Small Finance Bank||7||8.25||9||8||01-Feb-20|
|Jana Small Finance Bank||8.25||8.5||8.4||8.25||20-Dec-19|
|Suryoday Small Finance Bank||7.75||8.25||8.5||9||01-Dec-19|
|Ujjivan Small Finance Bank||7||8||8.1||7||19-Dec-19|
Data taken from respective banks’ websites on 04 Feb 2020. For each year range, maximum offered interest rate is considered. Interest rates for normal fixed deposit up to Rs. 1 crore.
Data compiled by BankBazaar.com, India’s leading online marketplace for loans, credit cards, and more.