As SBI has revised its FD rates again, we take a look at how their fixed deposit interest rates compare with those of other banks, including HDFC Bank and ICICI Bank.
The State Bank of India, India’s largest bank, hiked the rates of both its retail and bulk term deposits on Monday, ahead of the RBI’s bi-monthly monetary policy review. The term deposit or FD rates were revised across various tenures for both general public and senior citizens.
With the latest revision in rates, fixed deposits (below Rs 1 crore) of 1 year to less than 2 years will now fetch 6.70 per cent interest compared to 6.65 per cent before, while fixed deposits of 2 to less than 3 years will earn 6.75 per cent interest as against 6.65 per cent earlier. Likewise, while retail term deposits or fixed deposits of 3 years to less than 5 years will now fetch 6.80 per cent interest as against 6.70 per cent before, the FDs of 5 years and up to 10 years will earn 6.85 per cent interest compared to 6.75 per cent earlier.
For senior citizens, while the FDs of 1 year to less than 2 years will fetch 7.20% interest as against 7.15% earlier, fixed deposits of 5 years and up to 10 years will earn 7.35% interest as against 7.25% before.
Industry experts say that post the RBI rate hike in June, it was expected that banks would revise their deposit rates, making FDs attractive for consumers. However, while FDs are suitable for risk-averse investors, they are not tax-efficient. Therefore, one should look for some other saving and investment avenues also.
“Those looking to opt for parking their money temporarily without any risk while earning moderate returns add fixed deposits to their portfolio. However, FDs are not tax-efficient at all. Your FD interest income is clubbed with your income and taxed as per your slab. Therefore, one can also explore liquid mutual funds which have returns comparable to FDs, but are more tax-efficient if held for three years or longer due to the availability of indexation benefit on long-term capital gains, where you’re taxed only 20.6% with indexation if the investment is for three years or older,” says Adhil Shetty, CEO, Bankbazaar.com.
Revised Interest Rates of SBI’s Retail Domestic Term Deposits (Below Rs 1 Crore):
BANK FD INTEREST RATES:
|>=1 to <=2||2 to <=3||3 to <=5|
|INDIAN- PUBLIC SECTOR|
|Bank of Mah||6||6.5||6.6||6||7-May-18|
|Punjab & Sind||6.4||6.75||6.6||6.55||19-Mar-18|
|INDIAN- PRIVATE SECTOR|
|J & K Bank||6.25||7||7||6.25||11-May-18|
# Data taken from respective bank’s website as on 27 July 2018
# For each year range, maximum offered interest rate is considered; Interest Rate for normal fixed deposit amount below Rs 1 Cr