The returns on an FD account can vary due to many factors depending on the type of the FD account, financial institution, age of the investor, tenure of the account, etc. Most financial institutions follow the RBI’s guidelines while offering the interest rates on the FD accounts, however, if the deposit amount is higher, the financial institution may decide to offer a slightly higher interest rate. Additionally, the tax-free FDs offer tax benefits under the Section 80C of the Income Tax Act, 1961. FDs are widely sought for many other benefits such as the availability of a loan against the FD account itself. Most banks and non-banking financial companies (NBFCs) offer a loan up to a maximum of 90% of the account value at a lower interest rate compared to any other unsecured loan in the market. An FD account can be opened for a minimum of 7 days up to a maximum of 10 years or more.
FD accounts have been a popular choice of investment among conservative investors since it is safe and also provide the protection of an insurance. The insurance for up to Rs.1 lakh for the principal and accrued interest is applicable for all FD accounts, following the RBI’s directive. Based on the tenure of the FD account, the age of the investor, deposit amount, and various other factors, the rate of return may change.
Currently, there are many banks and NBFCs who offer a different rate of return than the other. Few of the financial institutions who offer the highest rate of returns are listed in the following table:
Banks and NBFCs offering a higher rate of return on fixed deposit accounts:
|Bank/NBFC||1 year||2 year||3 year||4 year||5 year|
|Mahindra Finance (Samruddhi)||7.35%||7.35%||7.40%||7.40%||7.40%|
|ESAF Small Finance Bank||9.00%||8.00%||7.00%||7.00%||7.00%|
|Fincare Small Finance Bank||8.00%||8.75%||9.00%||8.00%||8.00%|
|Lakshmi Vilas Bank (LVB)||7.10% to 7.25%||7.15%||7.15%||7.15%||7.15%|