Fixed deposits (FDs), also known as term deposits (TDs), are fixed income instruments that yield guaranteed returns over a pre-defined period of lock-in. FDs are offered by public and private sector banks, small finance banks as well as non-banking finance companies (NBFCs).
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The interest rates offered on FDs are subject to change from time to time, which also varies from lenders to lenders.
While depositors generally consider investing in large banks when it comes to FDs, the lower interest rates have become a point of concern for them. A majority of large commercial banks have recently reduced their FD rates in tandem with the RBI's decision to cut the repo rate on multiple occasions in the recent past.
In such a scenario, experts say, the depositors should embrace FDs offered by small finance banks and/ or NBFCs. The interest rates offered on small finance bank and company fixed deposits are higher than those on commercial bank fixed deposits.
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At some instances, the highest FD card rate offered by some small finance banks are around 200-300 basis points (bps) more than the highest FD card rates offered by most PSUs and large private sector banks.
The non-banking financial companies, on the other hand, offer FD rates at par or even higher than what the small finance banks offer. However, the deposits on small finance banks are considered relatively safer in comparison to those with NBFC.
In case of corporate FDs, the returns very much depend on the profits posted by the companies.
Here's a detailed comparison of interest rates offered by commercial banks, small finance banks and NBFCs on fixed deposits (FDs):
SBI Fixed Deposit Rates
State Bank of India (SBI) offers the following FD interest rates on deposits below Rs 2 crore:
| Tenors | Rates for public | Rates for senior citizens |
| 7 days to 45 days | 2.90% | 3.40% |
| 46 days to 179 days | 3.90% | 4.40% |
| 180 days to 210 days | 4.40% | 4.90% |
| 211 days to less than 1 year | 4.40% | 4.90% |
| 1 year to less than 2 year | 5.10% | 5.60% |
| 2 years to less than 3 years | 5.10% | 5.60% |
| 3 years to less than 5 years | 5.30% | 5.80% |
| 5 years and up to 10 years | 5.40% | 6.20% |
HDFC Bank Fixed Deposit Rates
HDFC Bank offers the following FD interest rates on deposits below Rs 2 crore:
| Tenors | Interest rate for public | Interest rate for senior citizens |
| 7 - 14 days | 2.75% | 3.25% |
| 15 - 29 days | 3.00% | 3.50% |
| 30 - 45 days | 3.25% | 3.75% |
| 46 - 60 days | 4.00% | 4.50% |
| 61 - 90 days | 4.00% | 4.50% |
| 91 days - 6 months | 4.10% | 4.60% |
| 6 mnths 1 days - 9 mnths | 4.50% | 5.00% |
| 9 mnths 1 day < 1 Year | 4.75% | 5.25% |
| 1 Year | 5.25% | 5.75% |
| 1 year 1 day - 2 years | 5.25% | 5.75% |
| 2 years 1 day - 3 years | 5.35% | 5.85% |
| 3 year 1 day- 5 years | 5.50% | 6.00% |
| 5 years 1 day - 10 years | 5.50% | 6.25%* |
Fincare small finance bank
Fincare small finance bank offers the following FD interest rates on deposits below Rs 2 crore:
| Tenure | Interest rate for public | Interest rate for senior citizens |
| 7 days - 45 days | 3.50% | 4.00% |
| 46 days - 90 days | 4.00% | 4.50% |
| 91 days - 180 days | 5.00% | 5.50% |
| 181 days - 364 days | 6.25% | 6.75% |
| 12 months - 15 months | 6.95% | 7.45% |
| 15 months 1 day - 18 months | 7.00% | 7.50% |
| 18 months 1 day - 21 months | 7.10% | 7.60% |
| 21 months 1 day - 24 months | 7.10% | 7.60% |
| 24 months 1 day - 30 months | 7.20% | 7.70% |
| 30 months 1 day - 36 months | 7.20% | 7.70% |
| 36 months 1 day - 42 months | 7.30% | 7.80% |
| 42 months 1 day - 48 months | 7.30% | 7.80% |
| 48 months 1 day - 59 months | 7.50% | 8.00% |
| 59 months 1 day - 66 months | 6.50% | 7.00% |
| 66 months 1 day - 84 months | 6.00% | 6.50% |
Bajaj Finserv
Bajaj Finserv offers the following FD interest rates on deposits below Rs 5 crore:
| Tenure in Months | Minimum deposit (in Rs.) | Cumulative | Non-Cumulative | |||
| Monthly | Quarterly | Half Yearly | Annual | |||
| 12 – 23 | 25,000 | 6.90% | 6.69% | 6.73% | 6.79% | 6.90% |
| 24 – 35 | 7.00% | 6.79% | 6.82% | 6.88% | 7.00% | |
| 36 - 60 | 7.10% | 6.88% | 6.92% | 6.98% | 7.10% | |
While, one can see that small finance banks and NBFCs offer higher rates, it's important to notice that higher interest income comes at slightly higher risk.
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Corporate FDs carry default risks, that is, the corporate not being able to return the money invested for various reasons as it totally depends on their performance. Interest incomes on both NBFCs and small finance banks are taxable at the rate of tax slab one falls under, experts opine.
Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
First Published: Jul 16, 2020 7:15 PM IST
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