Fixed deposits are one of the most popular and secure investment options in India. They offer a guaranteed rate of return, making them an attractive investment choice for those who are looking for a safe and steady source of income.
However, with so many banks and financial institutions offering fixed deposits, it can be difficult to choose the right one. Small finance banks are a relatively new entrant in the banking sector, and they are increasingly gaining popularity due to their focus on providing personalized services and better interest rates.
In this article, we will discuss the best small finance banks in India for high fixed deposit rates.
What are Small Finance Banks
Small finance banks are specialized banks that cater to the banking needs of the underserved and unbanked sections of the society, including small businesses, low-income households, farmers, and micro-enterprises.
These banks offer basic banking services such as savings and current accounts, fixed deposits, loans, and remittance services. They are licensed under the Banking Regulation Act, 1949, and are regulated by the Reserve Bank of India.
Benefits of investing in Fixed Deposits with Small Finance Banks
Small finance banks offer several benefits when it comes to investing in fixed deposits. Some of the key advantages include:
High-Interest Rates
Small finance banks offer higher interest rates compared to traditional banks, making them an attractive option for those looking for high fixed deposit rates.
Personalized Services
Small finance banks focus on providing personalized services to their customers, which means that they are more likely to understand your individual needs and offer tailored solutions.
Better Customer Experience
Small finance banks offer a better customer experience compared to traditional banks, with faster turnaround times and more efficient processes.
Factors to Consider When Choosing a Small Finance Bank for High Fixed Deposit Rates
Interest Rates
The first and foremost factor to consider when choosing a small finance bank for high fixed deposit rates is the interest rates offered by the bank. Generally, small finance banks offer higher interest rates on fixed deposits compared to traditional banks.
It is important to compare the interest rates offered by different small finance banks before making a decision.
Credibility
It is important to choose a small finance bank that has a good reputation and credibility in the market. You can check the bank’s ratings by credit rating agencies like CRISIL, ICRA, or CARE. Also, check the bank’s history, financial stability, and customer feedback before investing your money.
Deposit Insurance
Make sure that the small finance bank you choose is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). This ensures that your deposits up to Rs 5 lakhs are safe and protected in case of any untoward incident.
Taxation
Keep in mind that the interest earned on fixed deposits is taxable. Therefore, it is important to choose a small finance bank that offers tax-saving fixed deposits, which allow you to save on taxes and increase your returns.
Tenure and Flexibility
Small finance banks offer fixed deposits for various tenures ranging from 7 days to 10 years. It is important to choose a bank that offers flexible tenures to suit your investment goals. Also, check if the bank allows premature withdrawals and what penalties are involved.
Best Small Finance Banks for High Fixed Deposit Rates
Here are some of the best small finance banks in India for high fixed deposit rates:
Equitas Small Finance Bank
Equitas Small Finance Bank offers some of the highest fixed deposit rates in the market, with interest rates ranging from 4.25% to 8.10% for different tenures. The bank also offers senior citizen customers an additional interest rate of 0.50%.
Ujjivan Small Finance Bank
Ujjivan Small Finance Bank is another popular choice among investors looking for high fixed deposit rates. The bank offers interest rates ranging from 4.00% to 8.00% for different tenures, with an additional interest rate of 0.50% for senior citizen customers.
Fincare Small Finance Bank
Fincare Small Finance Bank offers interest rates ranging from 4.50% to 8.00% for different tenures, making it another attractive option for investors looking for high fixed deposit rates.
Jana Small Finance Bank
Jana Small Finance Bank offers interest rates ranging from 4.00% to 8.00% for different tenures, with an additional interest rate of 0.50% for senior citizen customers.
North East Small Finance Bank
North East Small Finance Bank offers interest rates ranging from 5.00% to 8.25% for different tenures, making it one of the best small finance banks for high fixed deposit rates.
Conclusion
Choosing the best small finance bank for high fixed deposit rates requires careful consideration of various factors such as interest rates, credibility, deposit insurance, taxation, tenure, and flexibility. Ujjivan Small Finance Bank, Equitas Small Finance Bank, Fincare Small Finance Bank, and Utkarsh Small Finance Bank are some of the best small finance banks in India for high fixed deposit rates. Do your research and choose the bank that suits your investment goals and financial needs.