Despite the galloping popularity of the equity and mutual fund instruments as a means of beating inflation, Fixed Deposits, or FDs, remain a favourite instrument for numerous Indians, especially the risk-averse types and senior citizens, with retirees inevitably parking a huge part of their portfolio in FDs.
A special category of FDs is those that bear a maturity period of 5 years. The reason: according to Section 80C of the Income Tax Act 1961, one gets income tax deductions to the extent of investment in 5-year FDs. One can invest a maximum of Rs 1.5 lakh a year in these FDs. Obviously, any depositor will get a bigger benefit if the FD also offers a higher rate of interest apart from the income tax deductions. Let’s see what interest rates are offered on 5-year FDs by the small finance banks – the banks which, as a rule, offer slightly higher rates on FDs that the scheduled commercial banks.
Small Finance Banks interest rates on FD
AU Small Finance Bank: AU Small Finance Bank offers 7.25% interest on 5-year FDs for general customers. Senior citizens get 7.75%.
Equitas Small Finance Bank: This bank offers 7.25% for general customers and an additional 50 basis points for senior citizens.
Utkarsh Small Finance Bank: Utkarsh Small Finance Bank is paying 7.75% for general customers and 8.35% for senior citizens.
Suryoday Small Finance Bank: This bank offers 8.25% interest on 5-year FDs for general customers and 8.75% for senior citizens.
ESAF Small Finance Bank: This bank offers 6.2% on 5-year deposits for non-senior customers and 6.75% for senior citizen customers.
Ujjivan Small Finance Bank: Ujjivan Small Finance Bank is offering 7.20% interest rate on 5-year Fixed Deposits for general customers and 7.70% to those who are past 60 years.
Interest rates in SFBs vary significantly
The point to note is that even among the small finance banks, the rate of interest offered varies significantly. One should find out the rate of interest before parking their additional money in 5-year FDs to earn interest as well as to get income tax deductions.
Tax-saver fixed deposits (FD) are a favourite instrument for millions of Indians who derive income tax deductions on the investment made in these instruments. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
