While a majority of public and private banks are currently offering FD interest rates in the range of 3-6% p.a., there are a few banks that are offering higher rates up to 8.25%.
With the Reserve Bank of India (RBI) deciding to keep the repo rate unchanged at 4% in its latest Monetary Policy Review meeting on Thursday, it looks like the fixed deposit interest rates will continue to remain low for now. However, at a time when capital protection has become as important capital appreciation, risk-averse investors would be well-advised not to look away entirely from investing in fixed deposits for reasons including capital safety, ease of investment, forced savings and profits.
Now, while a majority of public and private banks are currently offering fixed deposit interest rates in the range of 3-6% p.a., there are a few banks that are offering higher rates up to 8.25%. Investors may want to break their corpus into multiple FDs and choose to park a portion of their funds in some of these banks to avail of their higher rates, after due diligence and risk assessment. For additional security, they can limit their deposits to Rs 5 lakh per bank as that much is covered by the Deposit Insurance and Credit Guarantee Corporation, an RBI subsidiary, according to BankBazaar.
Another way to maximize fixed deposit investment benefit is to implement what is called the FD laddering technique. Under this strategy, investors can break their corpus into multiple FDs with different maturity tenures in order to create an investment loop.
For example, if your corpus is worth Rs 5 lakh, you would break it into five different FDs with a 1-year, 2-years, 3-years, 4-years and 5-years tenure and continue re-investing them, if feasible, instead of investing it all in a single FD. This would help you benefit from any higher rates offered in the future while better managing the overall investment risk by spreading your corpus into multiple accounts.
Most importantly, this would ensure higher level of investment liquidity to meet short-term requirements by eliminating the need to pre-close an FD after losing interest income, informs BankBazaar.
So, here are the 10 banks — including Suryodaya Small Finance Bank, Jana Small Finance Bank, RBL Bank, DCB Bank, and Fincare Small Finance Bank — currently offering the highest FD interest rates in the country:
Disclaimer: Data as on respective banks’ websites on August 4, 2020 for FD amount below Rs 1 crore. List for indicative purposes only and not exhaustive. Actual rate applicable to you could differ depending on your lender, investment tenure, age, etc. Data compiled by BankBazaar.com