Fixed Deposit Rates on the Rise: Should You Lock in Now?
If you’ve been looking to invest in fixed deposits but are reluctant to do so due to the lower interest returns, then here’s some news for you! Many banks are offering high interest rates of 7-9 per cent per annum on FDs for various tenures.
However, the rates are expected to drop in the second half of 2024! So, it seems the right time to lock-in some amount and safeguard its interest. But is it really so?
Premise
In a meeting in March 2024, the US Federal Reserve indicated a cut in the interest rates in the second half of 2024. Now, after the US Fed, RBI is also expected to cut the interest rates in the second half of 2024. After that, banks in India may also slash the interest rates on FDs. However, in March 2024, some banks raised their FD interest rates. Many banks are offering their highest interest rates across the decade. Now, people wonder if they should lock their money in FDs. Let’s derive an answer after a look at the FD interest rates of various banks.
Current FD Interest Rates of Public, Private and Small Finance Banks (SFBs) As of April 1, 2024
To answer your question and to help you make an informed decision, we’ve compiled the current FD interest rates of some public, private and SFBs in India.
Public Banks
The interest rates of some gigantic banking organisations across the public sector are as follows.
|
Bank |
FD Interest Rate – General Citizens |
FD Interest Rate – Senior Citizens |
Tenure of the FD |
|
Bank of India |
7.25 per cent |
7.75 per cent |
2 years |
|
Bank of Baroda |
7.25 per cent |
7.75 per cent |
Above two years and up to three years |
|
Punjab National Bank |
7.25 per cent |
7.75 per cent |
400 days |
|
Canara Bank |
7.25 per cent |
7.75 per cent |
444 days |
|
State Bank of India |
7 per cent |
7.50 per cent |
Two years to less than three years |
Source – Respective bank websites
Here, you can see, four banks are offering an interest rate of 7.25 per
cent per annum. But Bank of Baroda is the pick of all with 7.25 per cent
interest rate per annum for the highest FD tenure of two years and up to three
years.
However, if you look at the FD interest rates of public and private banks, you’ll see a couple of private banks offering higher interest rates. So, let’s look at them.
Private Banks
Here are the interest rates of some big private sector banks.
|
Bank |
FD Interest Rate – General Citizens |
FD Interest Rate – Senior Citizens |
Tenure of the FD |
|
Kotak Bank |
7.40 per cent |
7.90 per cent |
391 days to less than 23 months |
|
Axis Bank |
7.20 per cent |
7.85 per cent |
17 months to less than 18 months |
|
IndusInd Bank |
7.75 per cent |
8.25 per cent |
One year seven months to two years |
|
ICICI Bank |
7.20 per cent |
7.75 per cent |
18 months to two years |
|
HDFC Bank |
7.25 per cent |
7.75 per cent |
18 months to less than 21 months |
Source – Respective bank websites.
Small Private Sector Banks
Small private sector banks are usually popular for offering interest rates higher than the big public and private sector counterparts. Let’s look at the FD interest rates of some of the smallfinance banks across India.
|
Bank |
FD Interest Rate – General Citizens |
FD Interest Rate – Senior Citizens |
Tenure of the FD |
|
IDFC First Bank |
8 per cent |
8.50 per cent |
500 days |
|
RBL Bank |
8.10 per cent |
8.60 per cent |
546 days to 24 months |
|
Bandhan Bank |
7.85 per cent |
8.35 per cent |
500 days |
|
DCB Bank |
8 per cent |
8.60 per cent |
25 months to 26 months |
|
Yes Bank |
7.75 per cent |
8.25 per cent |
18 months to less than 24 months |
Source – Respective bank websites
According to the above table, RBL tops the interest rate chart with 8.10 per cent for a tenure of 546 days to 24 months. Now, let’s look at the FD interest rates of some SFBs in India for a more comprehensive overview.
SFBs
Small finance sector banks also offer higher interest rates. Let’s look at them.
|
Bank |
FD Interest Rate – General Citizens |
FD Interest Rate – Senior Citizens |
Tenure of the FD |
|
Suryoday SFB |
8.65 per cent |
9.10 per cent |
Two years and two days |
|
Unity SFB |
9 per cent |
9.50 per cent |
1001 days |
|
Ujjivan SFB |
8.50 per cent |
9 per cent |
15 months |
|
Shivalik SFB |
8.90 per cent |
9.40 per cent |
12 months to 18 months |
|
Jana SFB |
8.50 per cent |
9 per cent |
365 days |
Source – Respective bank websites
Per the above table, Unity SFB offers the highest interest rate of 9 per cent per annum for a tenure of 1001 days.
SFBs offer a higher interest rate. However, many people are hesitant to open FD accounts in these banks as they consider these investments risky. However, it should be noted that each customer of every bank is insured for Rs. 5 lakhs. The Deposit Insurance and Credit Guarantee Corporation (DICGC), which is a 100% RBI subsidiary, provides insurance coverage against a bank sinking or liquidating. As the bank’s customer, you don’t have to pay the insurance premium. It is the bank that pays it. Deposits made in SFBs are also covered by the DICGC.
Should You Invest in FDs Now?
Yes. Currently, most banks are offering high interest rates. However, these interest rates are projected to decline in the second half of 2024. So, it can prove the right time to lock a specific amount for a particular interest period and benefit from the temporary rise in interest rates. Nevertheless, this is a generic suggestion. You should consult your financial expert or investment advisor to help you make an informed decision based on your financial needs, objectives and risk-appetite.
You may also want to consider investing in bonds to diversify your investments and benefit from their stable income they provide. Sign up AltiFi to explore our listing and invest in bonds through our platform.
Disclaimer: The contents of this article should not be construed as tax or financial advice. Readers should seek advice from their tax or financial advisor before making any investment decision.