One of the most trusted instruments of savings in India is the good old bank fixed deposit. Right now, the biggest commercial bank in the country, the State Bank of India (SBI), is offering 7% as the highest interest rate across tenures on Fixed Deposits. If you are interested in making money without any risk, check the SBI FD interest rate and how much you can get in periods of 3, 5 and 10 years courtesy the force of compounding.
One has to keep in mind that 7% interest rate is just a shade – 10 basis points – lower than the 7.1% offered by the public provident fund (or PPF) that is one of the most popular long-term, fixed-income instruments trusted by millions down the generations.
In fact, if one considers the interest rate offered to a senior citizen, SBI is offering even more than the PPF rate – 7.5% to be precise – on deposits between two and three years.
In July 2023, BankBazaar said that on average Indians save as much as Rs 425,725.54 in Fixed Deposits.
The numbers
Calculators tell us that if one invests Rs 1 lakh in this instrument for two years, one would get a maturity amount of Rs 1,14,888.
Continue the tenure for one more year and you would get a maturity corpus of Rs 1,23,144.
If one reinvests the entire amount on maturity, the corpus swells to Rs 141,478. It basically means Rs 1 lakh invested in this instrument for 5 years will give you an amount of Rs 1,41,478.
On the completion of the sixth year, it would give you Rs 151,644.
Therefore, if you begin with an amount of Rs 1 lakh you will build a pool of Rs 1.51 lakh over a period of six years.
Should one be able to continue to avail of this rate for 10 years, it would double the initial pool. The total corpus would stand at 2,00,160 at the end of 10 years, the interest component alone being Rs 100,160.
SBI FD: 2 additional benefits
A big, though intangible, benefit of an FD with SBI is that it guarantees a very high degree of safety, which in these times of volatility, is not a small relief for any investor.
Another feature of any FD is that it could be used as collateral to obtain loans in any emergency. Once the loan is paid up, the depositor gets back the FD and is free to collect the gains on maturity.
FDs are also simpler instruments and a large number of depositors still prefer to park their surplus funds with fixed deposits.
By the way, the maximum interest rate that is offered by any SBI fixed deposit is 7.5%. It is offered to senior citizens for tenures between five and 10 years.
For senior citizens
If a senior citizen invests Rs 1 lakh in such an FD for 10 years, the total maturity amount would be Rs 2,10,235 or more than 2.1 times the initial amount.
And if one puts in Rs 425,725 – the average deposit in India in fixed deposits – in an FD carrying the 7.5% interest tag for 10 years, the interest component alone works out to Rs 4,69,298, taking the total maturity amount to Rs 8,95,023.
In July last year, 2.423 crore FDs in India cumulatively held a corpus of Rs 103 lakh crore.
SBI FD interest rate: In India, FDs are still the preferred choice of investment for a very large section of the population. Let’s find out how much would one make with the highest paying FD in the biggest bank in the country. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
