Senior citizen alert! Invest in these banks for 9% interest on FDs

For most of the Indians, especially, the senior citizens Fixed deposits (FDs) have been the most favored savings instrument as they don’t want to take the risk on their capital for a regular income. Given the fact that RBI has started cutting repo rate (key policy rate), the interest rate in the economy is going to come down in the near future.

The analysts opine RBI may cut repo rate by another 25 basis points in its next monetary policy meeting in April. Also, falling inflation warrant a cut in interest rate.

Even the government wants banks to cut lending rate to boost economic growth. And lending rates can’t come down until banks cut deposit rates. Under these circumstances, fixed deposit interest rates in the near term may come down. So it is advisable that senior citizens lock in higher prevailing interest rates on fixed deposits for a longer term like three years or five years.

While large banks like State Bank of India offer maximum up to 7.5-8% on fixed deposits to senior citizens, some small banks like AU Small Finance Bank offer up to 9% interest rate to senior citizens on its fixed deposits. So it is advisable that you search for banks that offer a higher interest rate on fixed deposits.

In order to make the task easier for you, we have listed the banks that offer the best interest rates on the different tenure of fixed deposits.

Here is a list of banks that offer the best rates to senior citizens on fixed deposits for 1-year, 2-year, 3-year and 5-years.

1-year fixed deposit

Both IndusInd and RBL Bank are offering 8.5% interest rate on 1-year FD, which is currently the highest in this segment. Lakshmi Vilas Bank (LVB), Karnataka Bank and City Union Bank are offering between 8-8.20% interest on a 1-yr FD. Normal depositors will get up to 50 basis points lower interest on the above-mentioned rates.

2-year fixed deposit

AU Small Finance Bank’s 8.75% is currently the highest interest provided by any bank on a 2-year FD. RBL Bank gives 8.55% interest while LVB and Axis Bank and Bandhan Bank are offering 8.2%, 8.15% and 8.15% interest on a 2-year FD.

3-year fixed deposit

On a 3-year fixed deposit, AU Small Finance bank offers 9%, highest interest rate in this segment. It may be noted that the rates mentioned above are for senior citizens and for deposit up to Rs 1 crore. Normal depositors will get up to 50 basis points lower on the rates mentioned above.

5-year fixed deposit

Private sector lender IDFC Bank offers the best rate (8.75%) on a 5-year fixed deposit followed by AU Small Finance Bank, which gives 8.5%. Lakshmi Vilas Bank offers 8.35% interest while DCB and RBL Bank offer 8.25% and 8.1% interest rate on 5-year FD.

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