Fixed Deposit rates go up: These banks offer up to 7.5% interest for up to 3 years
Small finance banks lead with the highest interest rates, followed by a foreign bank and private banks. The interest rates on FDs offered by public sector banks are not competitive like other banks.
Several banks have raised interest rates on fixed deposits (FDs) for short-term tenor (i.e. around three years and six months) after three consecutive repo rate hikes by the Reserve Bank of India (RBI). The cumulative rate hike is 140 basis points (one basis point is one-hundredth of a percentage point) between May and August to curb rising inflation. The small finance banks lead with the highest interest rates followed by a foreign bank and private banks. Comparatively, the public sector banks have lagged behind. The average interest rate of the top 10 banks is 7.2 percent for FDs of up to around 3 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 tenor of around three years.
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Fincare Small Finance Bank and Ujjivan Small Finance Bank offer 7.5 percent interest on FDs. Among small finance banks, these banks offer the best interest rates. This interest rate is applicable for a fixed deposit of Rs 1 lakh with these banks. The investment tenor is 1,000 days while investing at Fincare Small Finance Bank. Similarly, the investment tenors are 525 days and 990 days at Ujjivan Small Finance Bank to earn given interest rates.
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Suryoday Small Finance Bank offers 7.49 percent interest on FDs of Rs 1 lakh. The investment tenor is 999 days.
Jana Small Finance Bank offers 7.35 percent on FDs of Rs 1 lakh. The investment tenor is greater than three years but less than five years.
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Equitas Small Finance Bank offers 7.32 percent on FDs of Rs 1 lakh. The investment tenor is 888 days.
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Deutsche Bank is offering the best interest rates among foreign banks. It offers 7 percent interest on FDs of Rs 1 lakh. The investment tenor is greater than three years but less than four years.
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Among the private banks, Bandhan Bank and RBL Bank are offering the best interest rates. Both these banks offer 7 percent interest on FDs of Rs 1 lakh. The investment tenor is 1 year to less than 5 years and 15 months while investing at Bandhan Bank and RBL Bank, respectively.
IDFC First Bank offers 6.9 percent on FDs of Rs 1 lakh. The investment tenor is 750 days.
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Small Finance Banks and smaller private 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.
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The data on FDs is as of September 2, 2022, as given on bank websites. While compiling the data, Bankbazaar has considered highest offered interest rate for tenor of around three years.
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.
