On October 9, the Reserve Bank of India (RBI) made a significant shift in its approach by changing its stance from “withdrawal of accommodation” to “neutral” in its bi-monthly Monetary Policy Committee (MPC), marking a crucial change since May 2022.
The stance indicated that the central bank is prepared to adapt to changing economic conditions. However, it’s not ready to cut key interest rates just yet because of rising inflation concerns. Future rate cuts are possible if inflation remains below the 4 per cent medium-term target.
Gaurav Goel, an investment advisor registered with SEBI (Securities and Exchange Board of India), expected the RBI to start cutting rates from the last quarter of this financial year itself. Fixed deposit (FD) interest rates will also naturally align with benchmark interest rates.
Read More: FD Premature Withdrawal: What Happens To Your Interest When You Break A 5-Year FD After 1 Year?
Good time to invest in longer-tenure FDs
Traditionally, FDs have been a preferred instrument of investment for individual investors, particularly senior citizens, because of their assurance of consistent returns and perceived security.
Akshar Shah, Founder and Chief Executive Officer (CEO) of Fixerra, a banking technology platform, recommended that conservative senior citizens has a window of opportunity in securing a stable income stream by investing in FDs for a longer tenure to fetch a higher rate of interest. A delay could be a missed opportunity because the repo rate is likely to be slashed in the interim, he warned.
The following are a list of private banks that offer higher interest rates to senior citizens on three-year FDs. Paisabazaar has compiled the data.
The best rates offered by these banks on three-year FDs (of up to Rs 1 crore) for senior citizens have been taken into account. The value is calculated based on quarterly compounding of interest. The data is as of October 16, 2024.
DCB Bank
DCB Bank offers an interest rate of 8.05 per cent on FDs with a tenure of three years. Among private banks, this lender offers the best interest rate. In three years, a Rs 1-lakh FD would grow to Rs 1.27 lakh.
RBL Bank and Yes Bank
These banks offer an interest of 8 per cent on three-year FDs. A deposit of Rs 1 lakh will grow to Rs 1.27 lakh on the maturity date.
SBM Bank India
SBM Bank India offers an interest rate of 7.80 per cent on FDs of the same tenure. If you were to invest Rs 1 lakh, the amount would have grown to Rs 1.26 lakh on maturity.
| THE MOST REMUNERATIVE THREE-YEAR FIXED DEPOSITS FROM PRIVATE BANKS FOR SENIOR CITIZEN’S | ||
| Bank Name | Interest rate (per annum) for three years’ tenure (%) | How Rs 1 lakh grows in 3 years |
| DCB Bank | 8.05 | 1.27 lakh |
| RBL Bank | 8 | 1.27 lakh |
| YES Bank | 8 | 1.27 lakh |
| SBM Bank India | 7.8 | 1.26 lakh |
| Bandhan Bank | 7.75 | 1.26 lakh |
| IndusInd Bank | 7.75 | 1.26 lakh |
| Axis Bank | 7.60 | 1.25 lakh |
| Kotak Mahindra Bank | 7.60 | 1.25 lakh |
| Federal Bank | 7.50 | 1.25 lakh |
| HDFC Bank | 7.50 | 1.25 lakh |
| ICICI Bank | 7.50 | 1.25 lakh |
| Interest rates as of October 16, 2024 | ||
| Source: Paisabazaar.com |
Read More: European Central Bank Cuts Key Interest Rate by 25 bps to 3.25% as Inflation Fades
Bandhan Bank and IndusInd Bank
At 7.75 per cent, opening a Rs 1-lakh FD with Bandhan Bank and IndusInd Bank would yield Rs 1.26 lakh at the end of the three-year term.
Axis Bank and Kotak Mahindra Bank
Axis Bank and Kotak Mahindra Bank offer an interest rate of 7.60 per cent on three-year FDs. So, Rs 1 lakh will grow to Rs 1.25 lakh on maturity.
Federal Bank, HDFC Bank and ICICI Bank
At an interest rate of 7.50 per cent, Rs 1 lakh in a three-year FD with the Federal Bank, HDFC Bank and ICICI Bank becomes Rs 1.25 lakh on maturity.
Safety net
The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, guarantees investments in FDs of up to Rs 5 lakh.
