Yes Bank, DCB Bank and RBL bank offer more than 7% on fixed deposits for senior citizens

Investing in fixed deposits (FDs) has been preferred by senior citizens. They generally tend to park their savings in FDs for earning a regular monthly income after retirement. Investing in FDs is considered safer as compared to doing so in equity markets, as there is a high risk associated with market-linked products. However, falling bank deposit rates have reduced their monthly income sharply in the last one year or so. This is because banks have reduced interest rates on fixed deposits across tenures after steady repo rate cuts by the Reserve Bank of India (RBI). The interest rates on small-saving schemes too have been reduced in recent quarters.

Despite falling interest rates, there are still some banks that offer attractive rates on three-year FDs for senior citizens to lock into. 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 offer 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 gives 7.50 percent on three-year FDs for senior citizens. DCB Bank and RBL Bank offer 7.25 percent interest.

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 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 offers 7.25 percent and 6.55 percent interest respectively 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.

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: Why should you ladder your investments to beat low FD rates?

A note about the table

The data on FDs is as on 10 February, 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.