Several banks have raised interest rates on three-year fixed deposits (FDs) for senior citizens after four consecutive repo rate hikes by the Reserve Bank of India (RBI) this year.
Recently, Bandhan Bank raised the interest rate for senior citizens on its 600-day tenure FD.
While it will offer 7.5 percent interest on its 600-day normal FD (i.e. non-senior citizens), it offers 8 percent interest to senior citizens (60 years’ and above age).
Smaller and new private banks now offer rates up to 8 percent on three-year FDs for senior citizens, data compiled by BankBazaar shows.
Senior citizens should invest a part of their savings in FDs which offer liquidity and ensure interest income periodically.
The savings are useful to build an emergency corpus.
Although bank FD interest is taxable, a lower tax slab for most senior citizens ensures that tax liability is minimal or nil if other income is negligible.
Here are the banks offering the highest interest rates on three-year FDs for senior citizens:
1) DCB Bank and Bandhan Bank offer 8 percent interest on three-year FDs for senior citizens. Among private-sector banks, these lenders offer the best interest rates.
2) AU Small Finance Bank also offers 8 percent interest on three-year FDs for senior citizens.
Among small finance banks, this bank offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.27 lakh in three years.
3) Equitas Small Finance Bank offers 7.90 percent interest on three-year FDs for senior citizens.
A sum of Rs 1 lakh invested grows to Rs 1.26 lakh in three years.
4) IndusInd Bank, Yes Bank and Suryoday Small Finance Bank offer 7.50 percent interest on three-year FDs for senior citizens.
A sum of Rs 1 lakh invested grows to Rs 1.25 lakh in three years.
5) Union Bank of India offers 7.30 percent interest on three-year FDs for senior citizens.
Among public sector banks, this lender offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
6) Ujjivan Small Finance Bank offers 7.25 percent interest on three-year FDs for senior citizens.
A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
7) RBL Bank and Axis Bank offer 7.05 percent interest on three-year FDs for senior citizens.
A sum of Rs 1 lakh invested grows to Rs 1.23 lakh in three years.
Small finance banks and smaller private sector banks are offering higher interest rates to garner newer deposits.
The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the RBI, guarantees investments in fixed deposits of up to Rs 5 lakh.
The data on FDs is as of November 7 for Axis Bank and Bandhan Bank
For other banks, it’s as of October 19, as seen on lenders’ websites.
Interest rates are for senior citizens of 60-80 (deposit amount below Rs 1 crore). All listed (BSE) private sector banks are considered for data compilation.
Banks for which verifiable data is not available are not considered. For all FDs, quarterly compounding is assumed.