Fixed deposits are an important part of any portfolio. Investment strategists always say that a part of any portfolio should be invested in debt instruments. While debt-oriented mutual funds are one of the instruments they advocate, fixed deposits (FD) are a favourite instrument that generations of investors have reposed their faith in India.
FDs are of great use to a large number of people since they deliver assured and predictable returns with bigger peace of mind than market-related instruments. For any person, the interest rate offered by an FD is one of the crucial determinants of its usefulness.
Very few commercial banks offer interest rates that are higher than 8% per annum. Interest rates above 9% is a rarity in the entire banking industry. Only a few banks – almost all of them small finance banks or SFBs – offer rates that are more than 9%.
North East Small Finance Bank FD rates
Guwahati-headquartered North East Small Finance Bank offers 9% and 9.5% interest on FDs to general customers and senior citizens on FDs bearing maturity periods of 546-1,111 days on deposits up to Rs 5 crore.
If the deposit is more than Rs 5 core, the rate of interest rises to 9.25% and 9.75% for non-senior and senior citizens respectively.
Suryoday and Utkarsh SFB
Suryoday SFB offers a maximum interest rate of 9.1% for senior citizens on FDs bearing maturity periods of “above 2 years to 2 years 1 day”, “2 years & 2 days” and “2 years 3 days up to 3 years”.
Utkarsh SFB also offers 9.1% interest to senior citizens, which is the highest rate of interest. It is available to FDs maturing in 3 years.
SFBs, usually offer higher interest rates on FDs to both general customers and senior citizens to attract deposits. However, recently deputy governor of RBI, Swaminathan J cautioned SFBs on any over-dependence on these high-cost FDs to mop up cash. Needless to emphasise, excessive dependence on high-cost FDs raises the debt servicing obligation on these banks.
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