Following the Reserve Bank of India (RBI) hike in repo rate of 40 basis points to 4.4 percent (100 basis points = 1 percentage point) in May, several lenders including Axis Bank, Kotak Mahindra Bank, Canara Bank and Bank of India raised interest rates on three year fixed deposits (FDs) for senior citizens. Smaller private sector banks now offer rates up to 7.1 percent on three year FDs for senior citizens, data compiled by BankBazaar shows.
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Senior citizens should invest a part of their savings in FDs which offer liquidity and ensure interest income periodically. The savings are useful to build an emergency corpus. Here are the banks offering the best interests on three-year FDs for senior citizens.
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DCB Bank offers 7.10 percent interest on three year FDs for senior citizens. Among private sector banks, this lender offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
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Bandhan Bank, IndusInd Bank and Yes Bank offer seven percent interest on three year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.23 lakh in three years.
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RBL Bank offers 6.8 percent interest on three year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.22 lakh in three years.
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IDFC First Bank offers 6.5 percent interest on three year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.21 lakh in three years.
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Axis Bank, Federal Bank, IDBI Bank, and Kotak Mahindra Bank offer 6.25 percent interest on three year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.20 lakh in three years.
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Small finance banks and smaller private sector banks are offering higher interest rates to garner newer deposits. The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the RBI, guarantees investments in fixed deposits of up to Rs 5 lakh.
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The data on FDs is as of June 1, as seen on lenders' websites. Interest rates are for senior citizens of 60-80 (deposit amount below Rs 1 crore). All listed (BSE) private sector banks are considered for data compilation. Banks for which verifiable data is not available are not considered. For all FDs, quarterly compounding 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.
