Senior citizens mainly look for a safe, guaranteed return, tax benefit and risk free investment plans. That’s why, Fixed deposit For investors who do not want to face market risk, this has emerged as a perfect answer. Did you know that some banks offer more than inflation rate on FDs?
Like other central banks, the RBI has increased its interest rates earlier this week, demonstrating its commitment to bring down inflation that is well above its comfort zone and ensure adequate liquidity. . This has made FDs attractive while borrowing at interest rates is expensive.
Four private banks offer inflation-beating rates on fixed deposits. The latest Consumer Price Index (CPI) inflation rate is 6.95% in March. These four banks offer below 7% interest rate to senior citizens on their FDs 2 crores.
Here is the list:
indusind bank
For senior citizens, IndusInd offers a rate of 7% on tenures starting from 2 years to less than 61 months (5 years 1 month). It also has a 7% rate on its tax saving scheme with a tenure of 5 years.
tax exemption of 1.5 lakh is allowed under section 80C of the IT Act from the income of FD.
IndusInd offers a rate of 6.50% on tenures from 1 year to less than 2 years and 61 months and above. A rate of 6% is offered on tenures ranging from 270 days to 364 days.
Meanwhile, for shorter periods, rates vary from 3.25% to 5.25% for senior citizens.
Yes Bank:
This private bank offers 7% rate to senior citizens on tenure of less than 3 years or less than 10 years. Also, it gives an annual yield of 7.19% on the same tenure to the elderly.
Rates of 6.40% and 6.66% are available on tenures of less than 1 year to 18 months and 18 months to less than 3 years. For the short term, the interest rate of Yes Bank starts from 3.75% for the elderly to 5.58%.
The minimum amount for making an FD is Rs 10,000. The actual number of days will be calculated at the time of booking.
Here the minimum tenure is 7 days while the maximum is 10 years.
RBL Bank:
for deposit below 2 crore, RBL offers 7% rate to senior citizens on only one tenure of less than 36 months starting from 24 months.
It gives 6.80% rate maturing from 36 months to 60 months 1 day. Also, the same rate is offered on the 5-year tax saving deposit scheme. Also, the rate of 6.75% is applicable for tenures ranging from 12 months to less than 24 months.
Meanwhile, RBL offers a rate of 6.25% on tenures ranging from 60 months 2 days to 240 months. For shorter periods, the rate varies from 3.75% to 5.75%.
Here the minimum tenure is 7 days while the maximum is 240 months.
Senior citizens (60 years and above) who are resident Indians are eligible for an additional interest rate of 0.5% per annum.
Bandhan Bank:
Earlier this week, Bandhan Bank revised its fixed deposit rate with effect from May 4, 2022. It offers 7% interest rate on below deposits to senior citizens. 2 crore for tenure of 2 years to less than 5 years. The rate of 6.5% is given on tenure of less than 1 year. Whereas the interest rate of 6.35% is available on FD from 5 years to 10 years.
For tenures less than 1 year, the interest rate varies from 3.75% to 5.25%.
Fixed deposits become more attractive after RBI rate hike:
This week, on May 4, the RBI surprised by an increase of 40 basis points on the policy repo rate under the Liquidity Adjustment Facility (LAF) to 4.40% with immediate effect. In addition, the Permanent Deposit Facility (SDF) rate has been adjusted at 4.15%, and the Marginal Standing Facility (MSF) rate and the Bank Rate have been set at 4.65%.
On the rate hike, Prasenjit Basu, chief economist, ICICI Securities said, “The entire structure of interest rates will tighten, which means loans will be costlier and fixed deposits more attractive.”
Anjana Potti, partner, J Sagar Associates (JSA), said the hike in interest rates will have a significant impact on short-term deposits.
On deposits, JSA Partners said, “Short- and mid-term rates always rise sharply in response to any changes in the interest rate cycle.”
Experts believe that the rate hike cycle has started tackling rising inflation which plays a bad game on the growth trajectory of the economy. Rates may be hiked on future cards!
Prasenjit Basu said, “If the Russo-Ukraine war continues beyond May and June, more rate hikes will be required. If the war ends early (within the next 5-6 weeks), the global Inflation pressure will ease, it will ease. Pressure for further rate hikes.”
If further policy rates are hiked by RBI, it would mean that the fixed deposit interest rates will go up further. However, the time frame and quantum of extension will depend on the banks and will be closely monitored.