FD rates go up: These banks offer up to 8% interest on three-year fixed deposits
The small finance banks, foreign bank and smaller private banks offer the highest interest rates for FDs with a three-year tenure. Comparatively, the public sector banks have lagged behind.
Fixed deposit holders are cheering because of hike in interest rates in the current financial year. Banks have raised interest rates on fixed deposits (FDs) across investment tenures after six consecutive repo rate hikes by the Reserve Bank of India (RBI). The cumulative rate hike is 250 basis points (one basis point is one-hundredth of a percentage point) in this financial year to curb rising inflation. The small finance banks, foreign bank and smaller private banks offer the highest interest rates for FDs with a three-year tenure. Comparatively, the public sector banks have lagged behind. The average interest rate being offered by the top 10 banks is 7.6 percent for FDs with a tenure of three years, according to data compiled by BankBazaar.
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Fixed deposits offer liquidity and assured interest income at regular intervals. Thanks to the ample liquidity they promise, FDs can be useful while building an emergency corpus. Here are the top 10 banks offering the best interest rates on FDs for a tenure of three years.
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AU Small Finance Bank offers 8 percent interest on FDs. Among small finance banks, these bank offers the best interest rates. The rate is applicable on investments up to three years. A sum of Rs 1 lakh invested in this fixed deposit will grow to Rs 1.27 lakh in three years.
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Among foreign banks, Deutsche bank offers the best interest rates. It offers 7.75 percent interest on FDs with three-year tenure. Likewise, IDFC First Bank, IndusInd Bank and Equitas Small Finance Bank also offers 7.75 percent interest on FDs with three-year tenure. Among the private banks, IDFC First Bank and IndusInd Bank offer the highest interest rate. A sum of Rs 1 lakh invested in FDs of these banks grows to Rs 1.26 lakh in three years.
DCB Bank offers 7.60 percent interest on FDs with three-year tenure. A sum of Rs 1 lakh invested in this fixed deposit will grow to Rs 1.25 lakh in three years.
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Among public sector banks, Union Bank of India offers the most remunerative interest rate. It offers a 7.30 percent interest rate. A sum of Rs 1 lakh invested in this fixed deposit will grow to Rs 1.24 lakh in three years.
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Bandhan Bank, City Union Bank and Suryoday Small Finance Bank offer 7.25 percent interest on FDs with three-year tenure. A sum of Rs 1 lakh invested in this fixed deposit will grow to Rs 1.24 lakh in three years.
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Smaller private banks and Small Finance Banks are offering higher interest rates to garner newer deposits. The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the central bank, guarantees investments in fixed deposits of up to Rs 5 lakh.
The data on FDs is as of March 22, 2023, for three-year term deposits (non-senior citizens and deposits below Rs 1 crore), as given on bank websites. All listed (BSE) public and private banks and foreign banks are considered for data compilation. Banks for which verifiable data is not available have not been considered. For all FDs, quarterly compounding of interest is assumed.
Hiral Thanawala is a personal finance journalist with 9 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
