The Fixed Deposit interest rate for senior citizens has jumped over 9.5%. There are two small finance banks that are offering an interest rate of 9.5% or more to senior citizens and over 9% to others.
On Friday, Suryodaya Small Finance Bank (SSFB) increased its FD rate to 9.6% on senior citizen deposits below Rs 2 crore for 5 years. For regular customers, the bank is offering 9.1% interest. Unity Small Finance Bank is also offering up to 9.5% FD interest to senior citizens and up to 9% for others on deposits below Rs 2 crore.
Among major banks, SBI is offering up to 7.6% interest while HDFC Bank is offering up to 7.75% interest to senior citizens. Axis Bank is offering up to 7.95% interest while IDFC First Bank is offering up to 8.25% interest.
How much should you invest?
While bank FD rates are going up and may rise further if the RBI increases the repo rate again in future, it is a good opportunity for senior citizens and others to book FDs at higher rates. FDs not only provide guaranteed returns but are also considered safer than various market-linked products.
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However, before investing, you should know that only up to Rs 5 lakh is guaranteed under the RBI’s Deposit Insurance and Credit Guarantee Corporation (DICGC) rules. This means, in case of a bank failure, your deposits of up to Rs 5 lakh in a bank would be secure.
The Rs 5 lakh limit is inclusive of interest as well as the principal amount. Banks are also required to give the money back to depositors within 90 days in case of bank failure.
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To make the most of currently high FD rates and get guaranteed returns, senior citizens and others should invest only that amount in a bank for which the sum principal and interest is not more than Rs 5 lakh. For making more deposits, customers can open multiple FD accounts in different banks to remain on the safer side.
