Best Fixed Deposits – Yes Bank and DCB offer them

Equity markets are highly volatile and there is a high risk of losing the principal amount hence senior citizens prefer to invest in fixed deposits as FDs are safer and senior citizens like to earn a regular monthly income after retirement by investing the savings in the fixed deposits. 

But in the last one year or so, the falling bank deposit rates have reduced the monthly income of senior citizens drastically. The banks have reduced the interest rates on fixed deposits across the tenures after steady repo rate cut from the Reserve Bank of India (RBI) in 2020.

Despite all these, there are still some banks offering attractive rates on three-year FDs for senior citizens. Some of the banks having special fixed deposit schemes for senior citizens are ending on March 31. The smaller private banks are on top of the rate chart on fixed deposits due to the competition they face in garnering deposits.

Smaller private banks are offering higher rates

Smaller private banks are offering interest rates of up to 7.50 percent on three-year FDs for senior citizens. These interest rates on three-year FDs are higher compared to those offered by leading private and public sector banks. Yes Bank offers 7.50 percent on three-year FDs for senior citizens, DCB Bank and RBL Bank offer 7.25 percent and 7.10 percent interest respectively on three-year FDs.

Leading private banks such as Axis Bank and Kotak Mahindra Bank offer 5.9 percent and 5.6 percent interest respectively for the same tenure. ICICI Bank and HDFC Bank offer 5.65 percent interest on three-year FDs for senior citizens.

AU Small Finance Bank and Ujjivan Small Finance Bank offer 7.25 percent interest on three-year FDs for senior citizens. Thus the interest rates offered by small finance banks are higher compared to leading private banks. 

Leading Public sector banks like Bank of India and State Bank of India (SBI) offer 5.8 percent interest on their three-year FDs for senior citizens. Bank of Baroda offers 5.60 percent interest. Canara Bank and Union Bank of India are offering best interest rate, i.e., 6 percent interest on their three-year FDs for senior citizens. The minimum investment amount is not the same across banks. At private and public banks, the amount ranges from Rs 100 to Rs 10,000.

Investments in fixed deposits of up to Rs 5 lakh are guaranteed by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI.

The Best Rates for Senior Citizens on 3-Year FDs

BankAnnual rate of Interest (%)What Rs 1L grows to in 3 years(Rs)
Private Banks
Yes Bank              7.50            1,24,792
DCB Bank              7.25            1,24,055
RBL Bank              7.10            1,23,508
IndusInd Bank              7.00             1,23,144
Bandhan Bank              6.25            1,20,448
Public Sector Banks
Canara Bank              6.00            1,19,562
Union Bank              6.00            1,19,562
Bank of India              5.80            1,18,857
State Bank of India              5.80            1,18,857
Punjab & Sind Bank              5.75            1,18,681
Interests offered by Banks

Compiled by BankBazaar.com

Interpret the table considering the following:

  1. All listed (BSE) public sector banks and private banks are considered for data compilation. Banks for which verifiable data is not available are not considered. 
  2. The data on FDs is as on 17 March, 2021, as given in respective websites. 
  3. Interest rates given are for senior citizens of 60-80 years age (deposit amount below Rs 1 crore). 
  4. Quarterly compounding is assumed for all FDs.

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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