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FD Interest Rates: Widening Gap Between PSBs & Pvt Banks

Author: Dasari Sreenivasa Rao/Wednesday, November 27, 2019/Categories: Exclusive

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FD Interest Rates: Widening Gap  Between PSBs & Pvt Banks

Despite, several investment products, banks’ fixed deposit schemes are always considered as one of the most preferred and safe investment. On the other hand, small finance banks are offering attractive interest rates on fixed deposits when compared with major PSBs. For instance, Fincare Small Finance Bank offers highest interest at the rate of nine per cent on FDs maturing in 24 months to 36 months. However, PSBs enjoy trust of depositors, who consider them as safe place for their hard-earned money.

The largest public-sector lender State Bank of India (SBI) finished at the bottom of the fixed deposit (FD) interest rates offered by public-sector banks (PSBs), while Union Bank of India (UBI) topped the latest list. UBI offers 6.6 per cent interest rate on FD less than one year as against 6.25 per cent of SBI, according to a latest report compiled by

As per the data from, UBI is followed by IDBI Bank with 6.45 per cent, Indian Bank with 6.45 and Punjab National Bank (PNB) with 6.4 per cent. Other PSBs-- Canara Bank, Bank of Baroda (BoB),  Central Bank of India and Syndicate Bank are also offering 6.4 per cent on FDs with below one-year tenure.

Housing finance companies are competing with PSBs as they offer attractive interest rates on par with small finance banks. For instance, LIC Housing Finance is offering interest rate of 7.80-8% on deposits of one year to five years. These housing finance firms enjoy trust of depositors like PSBs. PNB Housing Finance is offering 8.25-8.45% on deposits of 1-10 years. Sriram Transport Finance is offering 8.25-11.13% on 1-5 year tenures.

FD rates above 8.5%

The RBI-regulated small finance banks are moving ahead in attracting salaried people to their fixed deposit schemes by offering higher interest rates. For instance, Fincare Small Finance Bank is offering highest nine per cent interest rate on select maturities for general customers. Suryoday Small Finance Bank and Utkarsh Small Finance Bank offer 8.5 per cent and 8.75 per cent interest rates respectively.

Above this, senior citizen savings schemes are in demand as depositors get several benefits such as higher interest rate, tax benefits and other features as well. Any senior citizen, who is 60 or above, can avail of the benefits of Senior Citizens Savings Schemes. Among the various small savings scheme, Senior Citizens Savings Scheme offers the highest rate of interest.

For deposits maturing in seven days to 90 days, Fincare Small Finance Bank offers four per cent interest. Interest rate is six per cent for 91 days to 180 days, seven per cent for 181 days to 364 days. The bank offers eight per cent and 8.25 per cent interest for deposits maturing in 12 months to 15 months and 15 months 1 day to 18 months, respectively. FDs maturing in 18 months 1 day to 21 months will fetch 8.5 per cent interest and deposits maturing in 21 months 1 day to 24 months will give 8.75 per cent interest. Fincare Small Finance Bank offers highest interest at the rate of nine per cent on FDs maturing in 24 months 1 day to 36 months. FDs with 3 year 1 day to 5 years and 5 years 1 day to 7 years will fetch an interest rate of 8% and 7%, respectively.

Senior citizens will get 50 basis points over and above general customers. FDs with maturing period of 7 days-7 years will fetch an interest rate ranging between 4.50 per cent to 9.50 per cent.

Utkarsh Small Finance Bank latest FD interest rates for general depositors are as follows: FDs with maturity period 7 days to 45 days and 46 days to 90 days will fetch 4.75 per cent and 5.50 per cent interest, respectively. For 91 days to 180 days, the bank gives 6.75 per cent interest, for 181 days to 270 days, the bank gives seven per cent interest.

Deposits maturing in 271 days to less than one year will fetch you an interest rate of 7.25 per cent. On deposits maturing in 1 year to 455 days, the bank gives 8.20 per cent. Utkarsh Small Finance Bank offers the good interest rate on deposits maturing in 456 days to less than two years. The bank provides 8.5 per cent interest rate on deposits. On deposits maturing in two years to less than five years, the bank offers eight per cent. On five-year FDs, Utkarsh Small Finance Bank provides 8.35 per cent and 7.75 per cent interest on 5-10 years FDs.

Generally, senior citizens will get 50 basis points (bsp) when compared to the general customers. FDs maturing in 7 days to 10 years will fetch an interest rate ranging between 5.25 per cent to nine per cent.

According to latest FD rates of Suryoday Small Finance Bank, the interest rates for below Rs2 crore deposits for general public are here: For deposits maturing in 7 to 45 days, Suryoday Small Finance Bank is offering four per cent interest. For 46 days to 90 days, 91 days to 6 months, Above 6 months to 9 months, the bank is providing five per cent, 5.5 per cent and 7.5 per cent interest respectively.

The total saving deposits with PSBs and private banks in India were Rs 39.72 lakh crore as on March 31, 2019, while foreign banks had a share of Rs 58,630 crore, according to RBI data. The total deposits with scheduled commercial banks recorded a two-digit growth during the first quarter of 2019-20 financial year. The savings deposits in the domestic banking sector were Rs35.99 lakh core in 2017-18 financial years. Since 2011, private sector banks have been gaining market share over PSBs. The share of PSBs in the total deposits in Indian banking sector fell from 74.6 per cent in 2011 to 63.1 per cent in FY19. Contrary, private banks during the period gained market share of 28.7 per cent as against 18 per cent.

The author is a business journalist with 26 years of experience


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