These banks are offering highest interest rates on FDs
These banks are offering highest interest rates on FDs 
New Delhi: The Reserve Bank of India in its last monetary policy review meeting of the current fiscal decided to keep the repo and reverse repo rates unchanged at 4% and 3.35%. Note that assured returns, high liquidity, and ease of investments make fixed deposits one of the most popular investment instruments in our country, especially among risk-averse investors like senior citizens.
However, now, FD interest rates have started touching multi-year lows after the pandemic outbreak last year – something that has been bothering investors, and RBI’s announcement to keep the key policy rate unchanged at 4% is not good for FD investors. Most of the banks are offering anywhere between 3%-5.50% p.a. on normal FDs (for non-senior citizen depositors) up to 5 years amounting to less than Rs 1 crore (check table below for details). Only a few private and small finance banks are offering between 5.75%-7.50% p.a. on regular FDs with select tenures.
Fixed Deposit is one of the favoured guaranteed-return providing investment avenues for many individuals. The span of the FD can range from 7 days to 10 years. Bank Fixed Deposits provide assured returns and you can receive interest income on a monthly, quarterly, or annual basis. In a cumulative FD, interest earned is periodically reinvested in the principal amount, which earns you more returns. As you earn interest on the interest earned throughout the financial year, your income will be higher.
FD rates offered by key banks on deposits up to Rs 1 crore:
| Bank | 6 months- 1 year(%) | 1-2 years(%) | 2-3 years(%) | 3-5 years(%) | 5 years and above(%) | Senior Citizen(%) |
| DCB Bank | 5.95 | 6.05-6.70 | 6.5 | 6.75 | 6.75 | 4.75-7.25 |
| Yes Bank | 5.50-5.75 | 6.25-6.50 | 6.5 | 6.75 | 6.75 | 4.00-7.50 |
| IndusInd Bank | 4.5-5.75 | 6.5 | 6.5 | 6.5 | 6.75 | 4.50-6.80 |
| RBL Bank | 5.25-5.75 | 6.5 | 6.5 | 6.25-6.75 | 6.25 | 5.75-7.25 |
| Karur Vysya Bank | 4.75-5 | 5.5 | 5.5 | 5.65 | 5.65-6 | 6-6.15 |
| Union Bank of India | 4.30-4.50 | 5.25-5.30 | 5.30-5.50 | 5.50-5.55 | 5.55-5.60 | 3.50-6.10 |
| Karnataka Bank | 5.2 | 5.3 | 5.30-5.55 | 5.55 | 5.55-5.70 | 3.80-5.95 |
| Canara Bank | 4.45 | 5.2 | 5.4 | 5.5 | 5.5 | 4.50-6.14 |
| Axis Bank | 4.5-5.15 | 5.10-5.25 | 5.4 | 5.4 | 5.5 | 4.5-5.90 |
| South Indian Bank | 5 | 5.4 | 5.4 | 5.5 | 5.5 | 5.50-6 |
| Federal Bank | 3.75-4.40 | 5.10-5.35 | 5.35 | 5.35 | 5.5 | 5.70-6.20 |
| SBI | 4.4 | 5 | 5.1 | 5.3 | 5.4 | 3.40-6.20 |
Bank fixed deposits are considered safe because all commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Each depositor in a bank is insured upto a maximum of Rs 5 lakh for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank’s licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force
For example, if an individual had a principal account of Rs 4.94 lakh plus accrued interest of 5,000, the total amount insured by the DICGC would be Rs 4.99 lakh. Remember that if the principal amount is Rs 5,00,000 then the interest part will not be covered as it will be above the insurance limit per bank.
Earnings on bank deposit interest attract tax in the form of Tax Deducted at Source (TDS). Prior to paying the interest to the receiver, the…
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