With up to 9% returns, small finance banks lead the FD race; how much do other banks offer?

Fixed Deposits (FDs) remain a go-to investment choice for conservative investors who value capital protection and predictable returns over market-linked volatility. These instruments, offered by banks, are attractive to retirees, risk-averse savers, and individuals looking to lock in interest earnings without worrying about daily market movements.

Among banks, NorthEast Small Finance Bank currently offers the highest FD interest rate of 9% for the specific tenure of 18 months 1 day to 18 months 2 days. This is closely followed by Suryoday Small Finance Bank and Unity Small Finance Bank, each offering 8.6% with tenures of 5 years and 1001 days, respectively. These rates outshine traditional savings and are ideal for depositors seeking high yields over fixed tenures.

Small Finance Banks (SFBs) are leading the FD interest rate charts. Apart from the top three, Jana Small Finance Bank offers 8.2% for a 5-year deposit, while Utkarsh Small Finance Bank gives 8.25% for 2 to 3 years. These institutions, being newer entrants, often offer more attractive rates to build customer deposits. However, depositors must weigh returns against slightly higher perceived risk profiles compared to large commercial banks.

Among private sector banks, the best FD rate stands at 7.75%, offered by multiple lenders including Bandhan Bank, DCB Bank, IndusInd Bank, RBL Bank, and SBM Bank India, each on varying tenures ranging from 1 year to 5 years. While these don’t match SFB rates, they provide better safety and stability, making them ideal for moderately conservative investors seeking a balance between returns and reliability.

Public Sector Banks (PSBs), known for their safety, offer comparatively modest FD rates. The highest comes from Central Bank of India at 7.5% for a tenure of 3,333 days (9 years), followed by Indian Overseas Bank and Indian Bank at 7.3% each. While PSU bank rates are lower, they enjoy implicit sovereign backing, which appeals to highly risk-averse investors.

Source: PolicyBazaar.com