Business Desk – Senior Citizen FD: Fixed Deposit i.e. FD is very popular among senior citizens to keep their savings safe after retirement and get regular income. At present, some small financial banks are giving up to 8.50 percent annual interest on FD to senior citizens. However, the highest interest rates apply to deposits of specific duration in different banks.
Small financial banks are giving highest interest
The banks offering highest interest to senior citizens include Equitas Small Finance Bank, ESAF Small Finance Bank and Suryoday Small Finance Bank. The maximum interest rate in these banks is up to 8.50 percent. Jana Small Finance Bank and Ujjivan Small Finance Bank are offering interest up to 8.30 percent, while Shivalik and Utkarsh Small Finance Bank are offering interest up to 8.25 percent. These maximum rates do not apply to all periods.
How much interest in private banks?
Among private sector banks, DCB Bank is offering up to 8 percent interest to senior citizens. This rate is up to 7.95 percent in bank, 7.80 percent in SBM Bank India and 7.75 percent in IndusInd Bank. The maximum interest in Axis Bank is 7.25 percent. In HDFC Bank and ICICI Bank this rate is up to 7.10 percent, while in IDBI Bank it is up to 7 percent.
How much interest on FD in government banks?
Talking about government banks, Bank of India is giving interest up to 7.45 percent to senior citizens. In Punjab and Sindh Bank it is 7.35 percent, while in Bank of Baroda and Central Bank of India it is up to 7.25 percent. The maximum rate in Bank of Maharashtra and Indian Bank is 7.15 percent. State Bank of India and Union Bank of India are offering interest up to 7.05 percent to senior citizens.
interest rates of foreign banks
Among foreign banks, Standard Chartered Bank is offering up to 7.10 percent interest on FD to senior citizens. In Deutsche Bank this rate is up to 7 percent and in HSBC Bank it is up to 6 percent.
How much can you earn on an FD of Rs 20 lakh?
If a senior citizen makes an FD of Rs 20 lakh at an interest rate of 8.50 percent per annum, then according to simple calculations, he will get interest of Rs 1.70 lakh in a year. That means, on an average, an amount equal to interest income of Rs 14,167 is generated every month.
If we calculate simple interest for three years at this rate, the total interest will be Rs 5.10 lakh and in five years it will be Rs 8.50 lakh. However, the actual amount will depend on the bank's interest calculation and interest re-credit system. The total amount received in FD with compound interest may be different from this.
Is it right to keep the entire deposit in one bank?
Senior citizens should avoid keeping their entire deposits in a single bank just on the basis of higher interest. Deposit Insurance and Credit Guarantee Corporation i.e. DICGC provides insurance cover on deposits of a depositor in a bank up to a total of Rs 5 lakh including principal and interest. Therefore, if there is a large amount of money, dividing the deposits among different banks can be a strategy to reduce risk.
Keep these things in mind before making FD
Just looking at the interest rate is not enough while choosing an FD. The period of deposit, rules for premature withdrawal of money, method of getting interest and availability of money as per your need should also be kept in mind. Especially in case of retirement savings, it is better to keep some amount in a place which can be easily used when needed.
Note: FD interest rates may change from time to time and the maximum rate may be applicable only for a particular tenure or deposit amount. Before investing, please check the current interest rate and rules of the concerned bank.
