Fixed deposit (FD) is a highly popular investment tool in India, offering a slew of benefits such as low risk, guaranteed returns, and the flexibility of tenure selection. However, what most investors seek from an FD is a high-interest rate. The highest FD rates can significantly enhance the returns on your investment, making it a real game-changer in your financial planning.
Let us delve into understanding which financial institutions currently offer the highest FD rates in India.
Content Summary
Current Highest FD Rates in India
Small finance banks usually offer higher FD rates than their commercial counterparts. As of now, some of the top rates are provided by Utkarsh Small Finance Bank that offers an FD rate of up to 7%, and Suryoday Small Finance Bank that provides up to 6.75% for regular customers and up to 7.25% for senior citizens (on deposits up to Rs. 2 crores).
Notably, RBL Bank offers up to 7.10%, one of the highest FD rates among commercial banks in India for regular customers and up to 7.60% for senior citizens, respectively. However, these rates are applicable for term deposits between 12 to 24 months. For tenures of 24 months to less than 36 months, the bank offers up to 7.2% and 7.7% for regular customers and senior citizens, respectively.
Example Calculation: Monthly Interest on a 2 Lakh FD
Turning our attention to the monthly interest for 2 lakh fixed deposit, let’s consider an FD with the Utkarsh Small Finance Bank at their highest FD rate of 7%. By the compound interest formula, A=P(1+r/n)^(nt), where A is the end balance, P is the principal or the initial deposit amount (Rs. 2,00,000), r is the annual interest rate (7% or 0.07), n is the number of times that interest is compounded per year (let’s take it as 4 for quarterly compounding), and t is the time the money is invested for in years (let’s take it as 1 for one year). By inserting these values in the formula, we’d get an approximate end balance of Rs. 2,14,491. This means, within one year, you’d earn approximately Rs. 14,491 as interest.
Remember, these FD rates change periodically. It is advisable to compare the FD rates offered by different banks before making a final decision.
Considerations for Choosing an FD
Moreover, choosing an FD purely on the basis of the highest FD rate may not always be the wisest course of action. Factors such as credibility of the financial institution, ease of the application process, customer service, and interconnected services must also be considered.
Insurance and Diversification
In fact, the deposit insurance scheme in India covers only up to Rs. 5 lakh per depositor across all the banks for both principal and interest. Therefore, diversification of FDs across different reputed banks is also a strategy investors might want to consider.
Investing wisely requires a comprehensive understanding of the financial market and reflecting upon one’s financial goals. Consideration of both tangible and intangible factors will enable you to make an informed and profitable decision.
DISCLAIMER:
This article is for informational purposes only and does not constitute financial advice. Any action taken based upon the information provided herein is at one’s own risk. It is always recommended to consult with a financial advisor or conduct thorough research before making any investment decisions.
Summary:
Fixed deposit rates differ among various financial institutions. Some of the highest FD rates in India are offered by small finance banks like Utkarsh Small Finance Bank (up to 7%) and Suryoday Small Finance Bank (up to 6.75% for regular customers and up to 7.25% for senior citizens). Among commercial banks, RBL Bank offers up to 7.10% for regular customers and 7.60% for senior citizens. For a fixed deposit amount of 2 lakh, at the highest FD rate of 7%, the interest earned in a year would be approximately Rs. 14,491. Investors are advised to do thorough research and use financial consultations before investments, and also consider factors beyond just highest FD rates such as credibility and quality of customer service of banks.
