Fixed deposits (FDs) are a favoured investment option among senior citizens for a variety of compelling reasons. Considering how continued market upheavals have left many investors, especially, senior citizens deciding between equities and debt instruments, many of them are now looking forward to earning from high-yield FDs issued by small finance banks (SFBs) that have helped many to gain high returns that not only help beat inflation but amass on more wealth for the remaining years of their lives.
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It’s not widely recognized that SFBs fall under the regulatory authority of the Reserve Bank of India (RBI). These banks are subject to the provisions of the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, and several other related statutes. Deposits initiated with SFBs are safeguarded by a deposit insurance program that covers up to ₹5 lakh, which includes both the principal and interest amounts.
Many SFBs are gaining repute owing to the high-interest rates they offer on FDs, especially to senior citizens owing to their risk-averse nature. Some of these include:
Unity Small Finance Bank
Unity Small Finance Bank presents an enticing interest rate of 9.50 per cent for Fixed Deposits maturing in 1001 days. Nonetheless, should you decide to withdraw your FD before its maturity date, a premature penalty of one per cent will be levied on the interest accrued during the period the deposit was held. This penalty serves as a deterrent for early withdrawals and helps the bank sustain its profitability. In sum, Unity Small Finance Bank provides a competitive FD interest rate, but it is essential to take note of the premature withdrawal penalty before making an investment decision.
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Utkarsh Small Finance Bank
Utkarsh Small Finance Bank extends an interest rate of 9.10 per cent to senior citizens for FDs maturing within the two to three-year timeframe. The bank also imposes a premature withdrawal penalty of one per cent, but this penalty is not applicable for closures occurring within seven days of deposit. In practical terms, if you opt to withdraw your FD before its maturity date, you’ll incur a penalty amounting to one per cent of the interest you would have earned if you had maintained the FD until maturity. It’s worth noting, however, that this penalty is calculated based on the lower of two rates: the card rate at the time of deposit or the contracted rate. Consequently, the penalty you pay will never exceed one per cent of the interest you would have earned if you had retained the FD until maturity.
Equitas Small Finance Bank
Equitas Small Finance Bank provides appealing interest rates for FDs, offering rates of up to 9 per cent for senior citizens on specific tenures. Nevertheless, it’s vital to recognize that withdrawing FDs before their designated maturity period will result in the forfeiture of any interest payments. This policy serves as a deterrent to discourage premature withdrawals, safeguarding the bank’s financial stability and its capacity to meet its obligations to depositors.
Furthermore, it’s important to highlight that no interest will be disbursed on premature withdrawals, and the minimum prescribed period for each tenure must be fulfilled to accrue interest.
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Suryoday Small Finance Bank
Suryoday Small Finance Bank offers a 9.10 per cent interest rate for FDs maturing within the two to three-year range. As per the information available on the bank’s website, in the event of premature withdrawal, for closure, renewal, or partial withdrawal of a term deposit, the interest will be calculated based on the rate applicable at the time of deposit booking for that particular term. However, a penalty of one per cent will be levied on this interest amount.
In practical terms, if you decide to withdraw your FD before its maturity date, you will still receive interest on the deposit for the duration it was invested, but you will incur a one per cent penalty on the interest that you would have earned if the FD had been held until maturity.
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Fincare Small Finance Bank
Fincare Small Finance Bank provides a high-interest rate of 9.21 per cent to senior citizens for FDs maturing in 750 days, making it one of the most competitive rates available for FDs in India. This feature renders Fincare Small Finance Bank an appealing choice for senior citizens aiming to optimize their investment returns. Nonetheless, it’s important to note that the interest rate is subject to potential fluctuations, so it’s advisable to verify the current rates with the bank. Additionally, it’s wise to stay informed about any associated fees or penalties, including the possibility of a premature withdrawal penalty.
Jana Small Finance Bank
Jana Small Finance Bank extends a nine per cent interest rate to senior citizens for FDs maturing in 1095 days. Nevertheless, it’s crucial to be aware of a 0.5 per cent premature withdrawal penalty that comes into effect should you decide to withdraw your FD before its maturity date. This penalty is calculated at 0.5 per cent of the applicable interest rate for the duration during which the deposit is held with the bank, and its purpose is to dissuade early FD withdrawals and secure the bank’s continued profitability.
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ESAF Small Finance Bank
ESAF Small Finance Bank provides a nine per cent interest rate on FDs maturing in the two-year to less-than-three-year range. Nevertheless, it’s crucial to pay attention to specific terms and conditions, especially in the context of premature withdrawal.
In the case of premature withdrawal within the stipulated minimum period:
For domestic deposits: No interest will be granted if the deposit is terminated within seven days.
For NRE deposits: No interest will be disbursed if the deposit is closed within a year.
In the event of an early withdrawal following the minimum duration:
Interest will be compensated at the prevailing retail FD rate established at the contract date, deducted by the relevant penalty.
