Yes Bank and DCB Bank offer the best rates on three-year FDs for senior citizens

Senior citizens prefer to invest in fixed deposits, as equity markets are highly volatile also there is a high risk of losing the principal amount. They prefer to earn a regular monthly income after retirement by investing the savings in the fixed deposits also its considered safer investment avenue.

The falling bank deposit rates have reduced monthly income of senior citizens sharply in the last one year or so. This is because the banks have reduced the interest rates on fixed deposits across the tenures after steady repo rate cut from the Reserve Bank of India (RBI) in 2020.

Despite falling interest rates, there are still some banks that are offering attractive rates on three-year FDs for senior citizens to lock-in. Some of the banks having special fixed deposit schemes for senior citizens are ending on March 31. Not surprisingly, the smaller private banks tend to top the rate chart on fixed deposits, given the competition they face in garnering deposits.

Also read: 5 factors to consider before choosing a fixed deposit

Smaller private banks are offering higher rates

According to data compiled by BankBazaar, smaller private banks are offering interest rates of up to 7.50 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 offer 7.50 percent on three-year FDs for senior citizens, followed by DCB Bank and RBL Bank offering 7.25 percent and 7.10 percent interest respectively on three-year FDs.

Leading private banks such as Axis Bank and Kotak Mahindra Bank offers 5.9 percent and 5.6 percent interest respectively on three-year FDs. ICICI Bank and HDFC Bank offers 5.65 percent interest on three-year FDs for senior citizens.

The interest rates offered by small finance banks are higher compare to leading private banks. AU Small Finance Bank and Ujjivan Small Finance Bank offer 7.25 percent interest on three-year FDs for senior citizens.

Among public sector banks, Canara Bank and Union Bank of India is offering 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) offer 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 public banks, the amount ranges from Rs 100 to Rs 10,000.

Also read | Union Bank, State Bank of India offer education loans at 6.8-6.85%

A note about the table

The data on FDs is as on 17 March, 2021, as given in respective websites. Interest rates given are for senior citizens of 60-80 years 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.