5 Best Public & Private Sector Banks Offering Good Returns On 1-Year FDs
If you want to invest for short term, you definitely want a secure pool to store cash before you need it in the potential future. Many investors in 2020 witness an uncertain market and a declining economy as the coronavirus crisis progresses, and 2021 may be similarly challenging as the economy tries to regain its fallen position. As a consequence, rather than losing money on a highly risky investment, you'll want to make sure you have it when you need it. As a result, the most important consideration when making a short-term investment is security. Due to the stability and certainty of returns, risk-averse investors favour bank FDs (fixed deposits) in the current volatile market. Even though interest rates are currently all-time low, there are some private banks that are providing higher rates on 1 year fixed deposit. Considering the rivalry for deposits, these banks appear to be at the top of the fixed deposit rate list.
1 Year FD Rates
For one-year FDs, IndusInd Bank and RBL Bank, for example, provide 6.5 percent interest rates. There are higher interest rates than those provided by public sector banks. On one-year FDs, leading private banks such as ICICI Bank and HDFC Bank provide 4.90 percent interest. Axis Bank is now offering a 5.15 percent interest rate and on one-year FD, Kotak Mahindra Bank pays 4.50 percent. On one-year FDs, public sector banks like Union Bank, Punjab & Sind Bank, and Bank of India provide 5.25 percent interest. On one-year FDs, leading banks including State Bank of India (SBI) and Bank of Baroda (BOB) provide 5% and 4.90 percent interest, respectively. Below are the top 5 public and private sector banks that are providing higher interest rates on 1 year fixed deposit.
| Private Sector Banks | ROI for non-senior citizens | ROI for senior citizens |
|---|---|---|
| IndusInd Bank | 6.50% | 7.00% |
| RBL Bank | 6.25% | 6.75% |
| Yes Bank | 6.25% | 6.75% |
| DCB Bank | 6.05% | 6.55% |
| Bandhan Bank | 5.75% | 6.50% |
| Public Sector Banks | ROI for non-senior citizens | ROI for senior citizens |
| Bank of India | 5.25% | 5.75% |
| Punjab & Sind Bank | 5.25% | 5.75% |
| Union Bank | 5.25% | 5.75% |
| Canara Bank | 5.20% | 5.70% |
| Indian Overseas Bank | 5.15% | 5.65% |
| Source: Bank Websites |
Who should invest in fixed deposits?
Investing in a fixed deposit has always been a popular option due to low risk and guaranteed returns. Fixed deposits are therefore not market dependent, meaning market uncertainty has no impact on them, making them an excellent option for those who are unfamiliar with the stock market. The term of a deposit may be as short as seven days or as long as ten years (20 years in some banks). Investors are paid a higher rate of interest, and as a result, their returns are higher than that of savings accounts. FDs are not market-linked like investment strategies such as mutual funds. The rate of interest provided to FD investors remains unchanged over the term of the deposit. Depositors know what they should get from their FD at the time of maturity by calculating fixed FD returns. This helps in proper financial preparation as well. Furthermore, since it is a liquid alternative, depositors are assured that if a crisis strikes, all they have to do is prematurely break the FD and address the dilemma. Fixed deposit interest rates are higher for senior citizens. Senior citizens' preferential rates typically range from 0.25 percent to 0.65 percent higher than standard FD interest rates. A fixed deposit's interest is paid in two ways: cumulative and non-cumulative. A cumulative fixed deposit is one on which interest is accrued or received until the maturity term ends. Non-cumulative fixed deposits have interest paid to the depositor on a monthly, quarterly, half-yearly, or annual basis. Non-cumulative options are good for those who want regular income, but cumulative options are best for those who want to maximise their returns by allowing compounding work for them.
Does fixed deposit is a secure bet?
Bank fixed deposits are covered by a Rs. 5 lakh insurance cover. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India (RBI), provides this coverage. If a bank goes bankrupt and is unable to refund depositors' savings or deposits, the DICGC will compensate them with Rs. 5 lakh, which includes both interest and principal amount. The DICGC insures all commercial banks in India, including foreign bank branches, local area banks, and regional rural banks. Currently, the DICGC covers all co-operative banks. The DICGC does not cover primary cooperative societies.