A fixed deposit is one of the most popular ways to save money in India. It is an investment product offered by private and public sector banks, as well as non-banking financial companies (NBFCs). Over the years, fixed deposits have been synonymous with investments in the country, mostly among middle class and senior citizens. The product allows investors to park their funds safely and earn a fixed rate of interest annually. This offers a stability to the ones who put in their money to fixed deposits, making them popular. The interest rate for fixed deposits accounts is also higher than that of a savings account in general cases.
Fixed deposits are called long-term deposits, since they are maintained for a certain number of years — usually around seven to 10 years. The reason why people still invest in this product because fixed deposits offer guaranteed returns on investments. The bank pays the interest rate applicable at time of depositing the money, thus making it totally risk-free, even if the interest rates lower at a later time. They also come with added bonuses — like Rs 5 lakh guarantee if a bank goes into liquidity, and the returns can be calculated easily.
Fixed deposit rates have been lower over the past two years — ever since India was hit with the Covid-19 pandemic. The Reserve Bank of India had in May 2020 lowered the repo rates at per cent due to the economic constraints faced due to Covid-19. This means that rates on fixed deposits have been lowered too. FD investors have been waiting since last year for the repo rates to be increased again, but the RBI has decided to maintain it.
Nevertheless, fixed deposits are still popular among people who want to make risk-free investments. This means that people from the middle class and senior citizens mostly deposit their money into FD accounts. The interest rates are generally higher for senior citizens, making fixed deposits especially popular among them. According to data, even if the general interest rates are lower, five private sectors are offering up to 7 per cent interest on fixed deposit accounts for senior citizens. Let’s take a look at them
YES Bank
Yes Bank is offering a 7 per cent interest rates for senior citizens opening their accounts in the bank for minimum three years. This is the best interest rates among private banks. So, if one invests a sum of Rs 1 lakh, after three years, it will go up to Rs 1.23 lakh.
RBL Bank
RBL Bank, formerly known as Ratnakar Bank, offers a 6.80 per cent interest rates for opening fixed deposit accounts for three years. On investment of Rs 1 lakh, a senior citizen will get Rs 22,000 as interest.
IndusInd Bank
IndusInd Bank, one of the newer competitors in the sector, is offering interest rates of 6.50 per cent for senior citizens who open their fixed deposit accounts for three years. Investors will get Rs 21,000 interest on a deposit of Rs 1 lakh. The minimum investment in this case, however, has to be Rs 10,000.
DCB Bank
Senior citizens who open their accounts in DCB Bank get an interest rate of 6.45 per cent for a period of three years. A sum of Rs 1 lakh will give an interest of Rs 21,000 after three years.
IDFC Bank
IDFC Bank fixed deposit rate is fixed at 6.25 per cent interest for senior citizens who open their accounts for three years. A deposit of Rs 1 lakh will turn into Rs 1.20 lakh within three years.
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