These Four Private Banks Offer Inflation-beating Rate On Fds To Senior Citizens. Check List

Senior citizens majorly search for a safe, guaranteed return, tax benefits, and risk-free investment schemes. Hence, fixed deposits emerge as a perfect answer for investors who do not want to face market risk. Did you know some banks offer higher than inflation rates on FDs?

Just like other central banks, RBI has also hiked its interest rate earlier this week showcasing its commitment to bring down inflation that is well above its comfort zone and ensure sufficient liquidity. This has made FDs attractive while borrowing interest rates expensive.

Four private banks offer inflation-beating rates on fixed deposits. The latest Consumer Price Index (CPI) inflation rate is at 6.95% in March. These four banks offer a 7% interest rate to senior citizens on their FDs below ₹2 crore.

Here’s the list:

IndusInd Bank

To senior citizens, IndusInd offers a 7% rate on tenures starting 2 years to below 61 months (5 years 1 month). It also has a 7% rate on its tax savings scheme with a term of 5 years.

A tax exemption of ₹1.5 lakh is allowed under section 80C of the IT Act, from the income of FDs.

IndusInd offers a 6.50% rate on tenures of 1 year to below 2 years, and 61 months and above. 6% rate is offered on tenures starting from 270 days to 364 days.

Meanwhile, for the shorter term, the rates vary from 3.25% to 5.25% for senior citizens.

Yes Bank:

This private bank offers a 7% rate to senior citizens on tenures starting 3 years to less than or equal to 10 years. Also, it gives an annualised yield of 7.19% on the same tenures to the elderly.

There is a 6.40% and 6.66% rate available on the tenure of 1 Year less than 18 months, and 18 months to less than 3 years. For shorter periods, Yes Bank’s interest rate starts from 3.75% to 5.58% for the elderly.

The minimum amount for creating an FD is Rs10,000. The actual number of days will be calculated at the time of booking.

Over here, the minimum tenure is 7 days while the maximum is 10 years.

RBL Bank:

For deposits below ₹2 crore, RBL offers a 7% rate on only one tenure starting 24 months to less than 36 months to senior citizens.

It gives a 6.80% rate maturing from 36 months to 60 months 1 day. Also, the same rate is offered on the tax-saving deposit scheme of 5 years. Further, a 6.75% rate applies on 12 months to less than 24 months tenure.

RBL, meanwhile, offers a 6.25% rate on 60 months 2 days to 240 months tenure. For shorter periods, the rate varies from 3.75% to 5.75%.

Over here the minimum tenure is 7 days while the maximum is 240 months.

Senior Citizens (60 years and above) who are Resident Indians are eligible for an additional Interest rate of 0.5% per annum.

Bandhan Bank:

Earlier this week, Bandhan Bank revised its fixed deposits rate from May 4, 2022. It offers a 7% interest rate to senior citizens on deposits below ₹2 crore for tenures 2 years to less than 5 years. A 6.5% rate is given on 1 year to less than to years tenure. While FDs above 5 years to up to 10 years, earn an interest rate of 6.35%.

For shorter periods such as less than 1 year, the interest rate varies from 3.75% to 5.25%.

Fixed deposits have become more attractive after RBI’s rate hike:

This week, on May 4th, RBI surprised with a hike of 40 basis points on the policy repo rate under the liquidity adjustment facility (LAF) to 4.40% with immediate effect. Further, the standing deposit facility (SDF) rate stands adjusted to 4.15%, and the marginal standing facility (MSF) rate and the Bank Rate are set at 4.65%.

On the rate hike, Prasenjit Basu – Chief Economist, ICICI Securities said, “The whole structure of interest rates will harden, implying that loans will be costlier and fixed deposits more attractive.”

Anjana Potti, Partner, J Sagar Associates (JSA) explained that the rate hike will have a significant impact on short-term deposits.

On deposits, JSA Partner said, “short and mid-term rates always rise quickest in response to any change in the interest rate cycle.”

Experts believe the rate hike cycle has commenced tackling soaring inflation that plays spoilsports on the economy’s growth trajectory. More rate hikes are on the cards ahead!

Prasenjit Basu said, “If the Russia-Ukraine war persists beyond May and June, more rate hikes will be needed. If there is an early end to the war (within the next 5-6 weeks), global inflationary pressures will ease, reducing pressure for further rate hikes.”

If more policy rate hikes are on the table by RBI ahead, that would mean fixed deposit interest rates will rise going forward as well. However, the timeline and the quantum of the hike will depend upon banks and will be keenly watched.