In May 2021, Yes Bank and DCB Bank reduced the interest rates on three-year FDs (fixed deposits) for senior citizens by 25 basis points. Despite falling interest rates, there are still some banks that are offering attractive rates on three-year FDs for senior citizens. Smaller private and small finance banks tend to top the rate charts on fixed deposit rates, given the competition they face in garnering deposits.
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Smaller private and small finance banks offer higher rates
According to data compiled by BankBazaar, smaller private banks are offering interest rates of up to 7.25 percent on three-year FDs for senior citizens. These interest rates on three-year FDs are higher compared to those offered by leading private and public sector banks. For instance, Yes Bank offers 7.25 percent on three-year FDs for senior citizens, followed by DCB Bank and IndusInd Bank, at 7 percent interest on three-year FDs.
Leading private banks such as Axis Bank and Kotak Mahindra Bank offer 5.9 percent and 5.6 percent interest, respectively, on three-year FDs. ICICI Bank and HDFC Bank offer 5.65 percent interest on three-year FDs for senior citizens.
The interest rates offered by small finance banks are higher compared to those on leading private banks. Suryoday Small Finance Bank offers 7.50 percent on three-year FDs for senior citizens, followed by Ujjivan Small Finance Bank offering 7.25 percent interest on three-year FDs.
Among public sector banks, Canara Bank and Union Bank of India are offering the best interest rate i.e. 6 percent interest on their three-year FDs for senior citizens. Bank of India and State Bank of India (SBI) offers 5.8 percent interest on their three-year FDs for senior citizens. Bank of Baroda offers 5.60 percent interest.
Investments in fixed deposits of up to Rs 5 lakh are guaranteed by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI.
The minimum investment amount varies across banks. At private and small finance banks, the amount ranges from Rs 1,000 to Rs 10,000.
Also read: Bank of Baroda, Union Bank offer the lowest rates on education loans
A note about the table
The data on FDs is as of 26 May 2021, as given on respective websites. Interest rates given are for senior citizens of 60-80 years of age (deposit amount below Rs 1 crore). All listed (BSE) public sector banks and private banks are considered for data compilation. Banks for which verifiable data is not available are not considered. For all FDs, quarterly compounding is assumed.