Small finance banks and emerging private banks are presently offering more attractive interest rates on three-year fixed deposits (FDs) compared to prominent public sector banks. This is welcome news for risk-averse investors seeking a secure and reliable investment avenue.
Several factors contribute to smaller banks providing higher interest rates on FDs. Firstly, they aim to expand their customer base and attract new clients. Additionally, smaller banks tend to have lower operational costs compared to their larger counterparts, enabling them to offer more competitive interest rates.
Small finance banks, as well as newer and smaller private banks, are currently offering interest rates as high as 8.6 per cent on three-year FDs. In contrast, prominent public sector banks like the State Bank of India (SBI), Union Bank of India, and others have not been able to match these competitive rates. Below is a list of the top 10 banks providing the most attractive interest rates on three-year FDs.
Suryoday Small Finance Bank: Suryoday Small Finance Bank stands out as the top choice among small finance banks for the highest interest rates on three-year FDs. At present, they are offering an impressive interest rate of 8.6 per cent on these three-year FDs. To put this into perspective, if you were to invest ₹1 lakh in a Suryoday Small Finance Bank FD for three years, your investment would grow to ₹1.29 lakh. This presents a favourable return on investment, particularly appealing to risk-averse investors seeking a safe and secure avenue for their funds.
Utkarsh Small Finance Bank: Utkarsh Small Finance Bank extends an attractive interest rate of 8.5 per cent on three-year fixed deposits (FDs). For instance, if you were to invest ₹1 lakh in a Utkarsh Small Finance Bank FD for three years, your investment would appreciate to ₹1.29 lakh.
This represents a commendable return on investment, especially appealing to risk-averse investors seeking a secure and dependable investment avenue.
It's worth noting that Utkarsh Small Finance Bank operates as a scheduled bank under the regulation of the Reserve Bank of India (RBI). Furthermore, it is a member of the Deposit Insurance and Credit Guarantee Corporation (DICGC), ensuring deposit insurance coverage of up to ₹5 lakh per depositor in the event of a bank failure.
AU Small Finance Bank: AU Small Finance Bank currently provides an attractive interest rate of 8 percent on three-year FDs. To illustrate, if you were to invest ₹1 lakh in an AU Small Finance Bank FD for three years, your investment would mature to ₹1.27 lakh. Despite being a relatively new bank, AU Small Finance Bank has experienced rapid growth in recent years. It boasts a commendable credit rating and a robust financial performance.
All in all, AU Small Finance Bank presents itself as an excellent choice for investors seeking a secure and reliable means to invest their funds while enjoying a favourable return on investment.
Equitas Small Finance Bank: Equitas Small Finance Bank extends an attractive interest rate of 8 per cent on three-year FDs. For instance, if you were to invest ₹1 lakh in an Equitas Small Finance Bank FD for three years, your investment would appreciate to ₹1.27 lakh. Although it is a relatively new entrant in the banking sector, Equitas Small Finance Bank has achieved substantial growth in recent years. Notably, it holds a favourable credit rating and maintains a robust financial performance.
Nevertheless, it's crucial to recognize that smaller banks may not possess the same level of financial stability as larger institutions. This entails assessing the bank's credit rating and financial performance to ensure it is a secure and dependable entity. Here are some guidelines for selecting a bank for your FD:
- Verify the bank's credit rating and financial health.
- Ensure that the bank is a member of the DICGC, thus, providing insurance coverage of up to ₹5 lakh per depositor in case of a bank failure.
- Compare interest rates offered by various banks to secure the best deal.
- Scrutinize the terms and conditions of the FD meticulously before making your investment.
Conducting thorough research before investing in an FD with a smaller bank is of paramount importance.