With the second wave of COVID-19 hammering the equity markets, there is a high risk of investors losing their principal amount. Senior citizens should invest in fixed deposits (FDs), which are considered safe. More so, if they need monthly cash flow and steady returns from their investments.
Despite falling interest rates, there are still some banks that offer attractive rates on three-year FDs for senior citizens to lock-in. Some of the banks had announced special fixed deposit scheme for senior citizens in May 2020. The last date for investment in these special FDs was March 31, 2021, but it has been extended till June 30, 2021.
Not surprisingly, the smaller private banks and small finance banks tend to top the rate chart on fixed deposits, given the competition they face in garnering deposits.
Also read: Punjab & Sind Bank, Central Bank of India offer the lowest rates on car loans
Smaller private banks and small finance 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 IndusInd Bank offering 7.25 percent and 7.00 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. Suryoday Small Finance Bank offer 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 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 small finance banks, the amount ranges from Rs 1,000 to Rs 10,000.
Also read | NPS equity funds of HDFC, ICICI Pru pension top the performance chart
A note about the table
The data on FDs is as on 21 April, 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.
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