In a country that is grappling with an inflation rate that averages 6-7%, people are constantly looking for avenues to invest money where their funds would grow in value in real terms. While there are a large number of investment options available in India today, including mutual funds, stocks, real estate, ULIPs and EFTs, a significantly high percentage of people still choose to put their money in fixed deposits. The main reasons are simplicity and assured rates of returns.
In this article…
What do FD Interest Rates Depend On?
Following the demonetization, which was announced on November 8, 2016 and wiped out about 86% of India’s cash overnight, banks received an enormous amount of deposits. By December 31, an inflow close to ₹15 lakh crores had been received, leading to rate cuts being announced by almost all banks. Against this backdrop, the question of which bank offers the highest FD interest rates became even more significant.
It’s important to understand that FD interest rates do not just vary between banks. They would also vary based on the tenure of the deposit. Banks may offer FDs with maturity dates ranging from as low as six months to twenty years. Typically, the higher interest rates are offered on FDs with a tenure of 5-10 years. Interest rates would also differ based on whether it’s simple or compounded and, in case of the latter, the frequency of compounding. For instance, the interest rates may be higher on quarterly compounding than on monthly compounding.
Banks Offering the Highest FD Interest Rates in India
As of March 2017, the following interest rates were being offered on FDs with a tenure of less than a year.
| FD Interest Rates | Banks |
| 7.25% | Ratnakar Bank |
| 7.15% | Karnataka Bank |
| 7.00% | Bandhan Bank, City Union Bank, Dena Bank, IDFC Bank, State Bank of India, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore, Repco Bank, Union Bank of India, Yes Bank |
As of March 2017, the following interest rates were being offered on FDs with a tenure of 1-2 years.
| FD Interest Rates | Banks |
| 8.00% | Repco Bank |
| 7.70% | Bandhan Bank |
| 7.50% | IDFC Bank, Ratnakar Bank |
| 7.25%-7.00% | City Union Bank, DCB Bank, ICICI Bank, Indus Ind Bank, Punjab and Sind Bank, State Bank of Bikaner and Jaipur, Standard Chartered Bank, Yes Bank |
As of March 2017, the following interest rates were being offered on FDs with a tenure of 2-5 years.
| FD Interest Rates | Banks |
| 8.00% | Deutsche Bank |
| 7.50% | Bandhan Bank, Ratnakar Bank |
| 7.25%-7.10% | DCB Bank, IDFC Bank, State Bank of Bikaner and Jaipur, Repco Bank, Yes Bank |
As of March 2017, the following interest rates were being offered on FDs with a tenure of 5-10 years.
| FD Interest Rates | Banks |
| 7.50% | Ratnakar Bank |
| 7.20% | DCB Bank, IDFC Bank |
| 7.10%-7.00% | Bandhan Bank, Dena Bank, Punjab and Sind Bank, Yes Bank |
NBFCs Offering the Highest FD Interest Rates in India
Microfinance is witnessing a boom in India. NBFCs, or non-banking finance companies, are typically offering higher FD interest rates than banks. As of March 2017, the following interest rates were being offered by NBFCs on FDs with a tenure of less than a year.
| FD Interest Rates | NBFCs |
| 7.77% | Shriram City Finance, Sundaram Finance |
| 7.65% | Mahindra Finance |
Seniors Get Higher FD Interest Rates in India
Banks offer senior citizens higher FD interest rates in India. As of March 2017, the following interest rates were being offered to seniors.
| FD Interest Rates | Tenure | Banks |
| 7.75% | Less than a year | Ratnakar Bank |
| 8.50% | 1-2 years | Repco Bank |
| 8.25% | 2-5 years | Deutsche Bank |
It’s important to note that interest rates on FDs keep fluctuating. So, one should enquire the rates at the time of investing. Also, when making a decision, one should include tax in the calculations to determine the amount that would be received on maturity.
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