SBI Vs ICICI Bank Vs Post Office Fixed Deposits: Latest interest rates compared

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Updated: May 22, 2020 1:59:40 PM

To get the benefit of high rates, both SBI Bank and ICICI bank have a new FD scheme exclusively for senior citizens.

 SBI, FD, ICICI, FIXED DEPOSIT, INTEREST RATE, Fixed Deposit Interest RatesThe bank fixed deposits are becoming the first choice of depositors to keep their savings safe.

Fixed Deposit Interest Rates: The recent cut in the repo rate by the RBI is expected to put more pressure on the interest rates. As the repo rate that represents the cost at which banks borrow money from RBI falls, the bank fixed deposit interest rate is also expected to fall.

And, at a time when the investment in debt funds are looking scary as far as defaults are concerned in some of the categories and the markets in its downturn phase, the bank fixed deposits become the first choice to keep their savings safe.

Here, we look at the FDs of certain large commercial banks such as State Bank of India (SBI), ICICI Bank and see what they have to offer on their FDs compared to what is being offered by small savings post office schemes.

State Bank of India FD

The SBI is offering 5.5 per cent interest on FDs in the period 1 year to less than 3 years and for the period 3 years to 10 years, it is 5.7 per cent per annum. For senior citizens, an additional interest of 0.5 per cent will be there. The rates are effective May 12, 2020.

SBI Wecare FD

A special “SBI Wecare” Deposit for Senior Citizens has been introduced by SBI wherein an additional premium of 30 bps over and above the existing 50 bps will be paid to Senior Citizen’s on their retail TD for ‘5 Years and above’ tenor only. ‘SBI Wecare” deposit scheme will be available for a limited period i.e. up to 30th September, 2020

ICICI Bank FDs

In the case of ICICI Bank FDs effective May 20, 2020, the interest rate is as follows:

  • 1 year to 389 days : 5.55 per cent
  • 390 days to less than 18 months: 5.55 per cent
  • 18 months to 2 years : 5.75 per cent
  • 2 years 1 day up to 3 years : 5.75 per cent
  • 3 years 1 day up to 5 years : 5.75 per cent
  • 5 years 1 day up to 10 years: 5.75 per cent

For the senior citizens, an additional interest of 0.5 per cent will be there to the depositors.

ICICI Bank Golden Years FD

To get the benefit of high rates, ICICI bank also has a new FD called ICICI Bank Golden Years FD exclusively for senior citizens. In this FD one gets an exclusive additional interest rate of 0.30% on the Fixed Deposits above 5 years tenure.

Resident Senior citizen customers, will get an additional interest rate of 0.30% for a limited time over and above the existing additional rate of 0.50%. The applicable duration of this FD scheme is 20th May, 2020 to 30th September, 2020. The additional rate will be available on fresh deposits opened as well as deposits renewed during the scheme period. The eligible FD tenure has to be 5 years 1 day up to 10 years. In case the deposit opened in the above scheme is prematurely withdrawn or closed after, on or after 5 years 1 day, the applicable penal rate will be 1.30%. In case the deposit opened in the above scheme is prematurely withdrawn/closed before 5 years 1 day, the prevailing premature withdrawal policy will be applicable.

Small savings schemes

Earlier for the period April to June 2020, the government had reduced the interest rates on small saving schemes such as PPF, NSC, KVP, SCSS, amongst others. The interest rate on the PO savings schemes is revised by the government at the beginning of every quarter of the financial year based on the yields on government bonds. Earlier, for the fourth quarter of 2019-20, i.e. January to March 2020, the rates were kept unchanged.

The interest rate on PPF was reduced from 7.9 per cent to 7.1 per cent per annum, a reduction of 80 basis points. For the Senior Citizen Savings Scheme, the interest rate was cut from 8.6 per cent per annum to 7.4 per cent per annum. In the case of 1-year time deposit, the reduction is 1.4 per cent as the rate has been cut from 6.9 per cent to 5.5 per cent. The 5-year deposit in PO offers 6.7 per cent per annum.

Sum Up

The small savings post office schemes are still offering a higher interest rate than bank FDs of most banks. The FDs of Small Finance banks may, however, offer a higher rate than post office schemes. Consider your risk profile, tax slab and the liquidity of funds before locking in funds in any of the fixed deposit investments.

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