Banks offer wider choices for FDs, RDs and MIS, with tenure as small as 7 days to 10 years or more, but interest rates offered on Post Office savings schemes are generally more attractive.
Post Office savings schemes are very popular because of the attractive interest rates and protection through sovereign guarantee. Reach of Post Offices in rural and far flung areas also makes the schemes very popular among rural investors. The interest rates on Post Office schemes are revised by the Government of India on quarterly basis.
Apart from Savings Accounts (POSAs), other schemes offered by Post Office are – Post Office Time Deposits or FDs, 5-year Recurring Deposits (RDs), Monthly Income Schemes (MIS), 5-year Senior Citizen Savings Schemes (SCSS), 5-year National Savings Certificates (NSCs), Kisan Vikas Patra (KVP), Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY). The Time Deposits offered by Post Office are of 1 year, 2 years, 3 years and 5 years.
The following table shows the latest interest rates offered on various Post Office savings schemes:
Banks offer wider choices for FDs, RDs and MIS, with tenure as small as 7 days to 10 years or more. However, comparative interest rates are lower than that of Post Offices and the deposits in which don’t bear any sovereign guarantee.
State Bank of India: The State Bank of India (SBI) is the largest scheduled commercial bank in India. The interest rates offered by the public sector bank on short-term FDs and for FDs over 5-year term are quite attractive. Apart from wide network, the goodwill and government backing have made the SBI FDs attractive.
HDFC Bank: One of the leading private sector lenders, HDFC Bank has a good financial health, which makes investors confident of putting their money in the bank. The bank, which gives good interest rates on FDs with a tenure of 1-3 years, offers highest interest for the term of 1-2 years in comparison to SBI, ICICI Bank and Post Office.
ICICI Bank: The biggest private sector money lender, ICICI Bank has a large customer base and provides a wide choice of term and interest rates for very short-term FD investors. For 5-year deposits, ICICI Bank offers the highest interest rate after Post Office.
The following table shows the current FD rates of SBI, HDFC Bank and ICICI Bank: