Top Bank Fixed Deposits Rates in India

16 Jan 2021 6 min read
Fixed Deposit: Top Bank Fixed Deposits Rates in India - Afinoz

The fixed deposit is one of the safest and most popular investment schemes. 

Not only does it help you save money but also helps you gain interest in it. Interest rates from  Bank FDs enable the depositor to achieve a reasonable return on investment over a fixed term. Under the fixed deposit system at the moment of opening the account, the depositor can invest the money only once.

The Interest rate on fixed deposits varies based on various factors. Following are the top bank fixed deposits interest rates in India:

Tenure: 1 year

Banks

Interest Rate (% p.a.)

IndusInd Bank

7.00

RBL Bank

6.75

DCB Bank

6.65

Ujjivan Small Finance Bank

6.50

Lakshmi Vilas Bank

6.00

Tenure: 2 years

Banks

Interest Rate (% p.a.)

IndusInd Bank

7.00

RBL Bank

6.75

DCB Bank

6.80

Ujjivan Small Finance Bank

6.50

AU Small Finance Bank

6.50

Tenure: 3 years

Banks

Interest Rate (p.a. %)

IndusInd Bank

6.75

RBL Bank

7.15

DCB Bank

6.95

Ujjivan Small Finance Bank

6.50

AU Small Finance Bank

6.75

Tenure: 5 years

Banks

Interest Rate (p.a. %)

IndusInd Bank

6.75

RBL Bank

6.50

DCB Bank

6.95

Lakshmi Vilas Bank

6.00

AU Small Finance Bank

6.50

 Factors Affecting Fixed Deposit Interest Rate

  • Deposit amount: Generally, banks provide a comparatively lower interest rate on bulk deposits. 
  • Tenure of the Deposit: Deposits with shorter tenure are often offered a lower interest rate than those having a longer tenure.
  • Type of the Depositor: Almost every bank in India offers a comparatively higher rate of interest for senior citizens.   

Special Features of Fixed Deposit  

  • In general, fixed deposits offer higher interest rates than a periodic savings account. 
  • Banks offer loans to meet any financial emergency against FDs. Your deposit serves as the security of the obtained loan. Depending on the bank, one may take a loan up to 75% to 95 % of the FD amount and the interest rate ranges from 1% to 1.5 % above the FD rate.
  • Any Indian national, including minors and HUFs,  can have a fixed deposit account. 
  • Banks also have a Sweep-in facility on term deposits, which enables the depositor to connect a fixed deposit account with his/her savings bank account. The advantage of this facility is that it allows the automatic transfer of the surplus amount into the FD account from the savings account. It enables the depositor to receive FD rates on your savings account with the option of breaking the FD and spending the balance at any point in time.
  • It requires 2 candidates who are entitled to receive the FD amount in the application form to be chosen by sending a death certificate after the account holder's death. 
  • For fixed deposits, premature withdrawal is not permitted, so you can not withdraw the deposit balance until maturity. However, in case of any emergency, you can withdraw the deposit by paying a penalty amount.

Important Things about Fixed Deposits 

  • Payments of interest 

The interest rate offered on fixed deposits (FD) will depend on the period for which you are investing in the FD and will also differ for FDs for the same tenure from bank to bank. Higher interest rates are usually provided to senior citizens. You may choose either a cumulative option or a non-cumulative option to earn interest payments.

Under the  cumulative option, interest earned on the deposit is re-invested and paid along with the principal amount at the time of maturity. 

In the case of a non-cumulative option, interest is credited to the account of the depositors at the pay-out period selected at the time of placing an FD. Generally, one can choose from the options offered by the bank to earn interest on a monthly, quarterly, semi-annual, or annual basis.

  • Taxes

In the possession of the investor , the interest earned on the FD is completely taxable. The rates applicable to your revenue tax slabs would be charged. As per current tax laws, TDS will be deducted by the bank if the interest payment exceeds Rs 10,000 in a single financial year. It is necessary to apply Form 15G or Form 15H (as applicable) to the bank to prevent TDS.

  • Early withdrawals 

One can withdraw his or her FD before the maturity date in the case of any urgent requirements. The bank may impose a penalty on premature withdrawals. The sum of the penalty varies from one bank to another. 

The rules about premature withdrawals must be reviewed during the placement of an FD. Banks also sell FDs without an early withdrawal facility, as well as FDs without a premature withdrawal penalty.

  • Loan Facility 

FD may be used as collateral to secure a loan. The maximum loan sanctioned is generally a certain percentage of the principal deposit. This proportion can vary from bank to bank. 

  • Nomination facility 

The Fixed Deposits (FDs) nomination facility is also available.

  • Automatic Renewals 

Most banks automatically renew the FD at maturity if no clear instructions are issued, for the same period for which it was initially placed at the interest rates prevailing on the date the FD matures. If you do not want your FD to be automatically renewed, you must select this option on the account opening form. 

If you forget to mention it then on the day of maturity, you can visit the bank branch and ask them to credit the proceeds to your savings account.

  • Placement by Net-banking 

Banks now provide the facility to open an FD account online via your account through Net Banking. Without having to visit a branch physically, one can invest in FD. Know, however, that if you invest electronically, your bank can not give you a printed FD receipt/advice.

Essential terms associated with interest rates for fixed deposits 

  • Timely closure: Timely closure  refers to the closing at the time of maturity of the fixed deposit account. The bank pays back the principal amount with the interest accumulated during the tenure chosen at the maturity date.
  • Breaking FD account: When the depositor withdraws the entire deposited money before maturity, it is just the opposite of timely closure. Usually, breaking the FD or early withdrawal is not permitted and is subject to the standards of the bank; banks charge a penalty before the maturity date at the time of breaking the FD and pay you back the principal amount and interest at a lower interest rate.

Fixed Deposit Interest Rate Calculator

You will want to know how much interest you will receive upon maturity on your FDs. By using an FD calculator available on the internet, it can be easily measured and you will find out the cumulative interest you will receive at the end of the tenure. Alternatively, with the formula given below you can find out the return on your FDs:

A = P * (1+ r/n) ^ n*t

Where,

I = A – P

A = Maturity amount

P = Principal amount

r = Interest rate

t = Tenure

n = Compounded interest frequency

= Interest earned

Conclusion:

It is known that a fixed deposit is a safe investment option that guarantees consistent interest rates, various interest payment options, and no market-related risks, with income tax deductions. However, it is crucial to compare available fixed deposit rates before making a decision. We hope that you got the information you were looking for in this article.

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