For a fixed tenure, fixed deposits (FDs) offer guaranteed returns. For safety, stability, and guaranteed returns, senior citizens prefer fixed deposits (FDs). Apart from providing fixed returns, they are easy to understand, offer liquidity options, and may offer tax benefits in some cases.
FD rates as well as interest rates have gone up in the last 12 months or so. FD interest rates for senior citizens range from 25 to 50 basis points higher than those offered by scheduled commercial banks like SBI, HDFC, Axis Bank, and others. Senior citizen FDs are currently being offered by some small finance banks at an interest rate of over 9%.
Small Finance Bank of Unity:
In this bank, senior citizens can obtain fixed rate deposits at 9.25% for a period of six months to 201 days, and for a period of 501 days. For a period of 1,000 days, the rate is 9.5%.
Small Finance Bank of Jana:
This bank offers 9% interest on FDs for 366-499 days, 500 days, and 501 days to 2 years.
Small Finance Bank of ESAF:
In this bank, senior citizens can get 9% interest on FDs for two to three years.
Small Finance Bank of the North East:
It offers senior citizen FDs at 9.35% interest rates for 555 days, and 1,111 days in West Bengal and North Eastern states.
The Suryoday Small Finance Bank is:
Suryoday Small Finance Bank offers senior citizen FDs maturing in five years an interest rate of 9.6%. Since these FDs mature in five years, they are eligible for tax deductions under section 80C.
Here are some things to keep in mind
FDs offered by small finance banks for senior citizens are offering high interest rates. Since these banks are not well known, one may be a bit wary of parking their money in these FDs. The Reserve Bank of India (RBI) also regulates small finance banks, just like schedule commercial banks do.
The RBI sets guidelines for them to follow. As far as loss of money is concerned, the same DICGC insurance cover of up to 5 lakhs that applies to scheduled commercial banks also applies to small finance banks, says Arijit Sen, a SEBI-registered investment advisor and co-founder of Merry Mind.
DICGC insures your deposits, including FDs in small finance banks, for up to $5 lakh per bank, per depositor, in the event of bank failure.
As PMC Bank defaulted in 2019, getting back your money under the DICGC scheme can be a time-consuming and tedious process.
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