Small finance banks continue to offer the highest fixed deposit (FD) rates in the market in mid-May, with some giving up to 8.1 per cent to regular depositors and 8.3 per cent to senior citizens. In comparison, most large public and private banks offer rates between 6 per cent and 7.25 per cent.
Data shared by fintech firm Stable Money shows that there is a wide gap between large and small banks, especially in the short- to medium-term tenure buckets.
Among the highest rates currently available for regular investors are 8.1 per cent from Suryoday Small Finance Bank for a tenure of two years and six months, and 8.1 per cent from Utkarsh Small Finance Bank for a tenure of one year and 301 days. Shivalik Small Finance Bank is offering 7.8 per cent for one year and 10 months.
Mid-term tenures emerging as the sweet spot
One of the clearest trends visible in the latest FD rate tables is that banks are offering their best returns largely in the 1.5-year to three-year maturity range instead of very long-term deposits.
For instance:
Bandhan Bank is offering 7.25 per cent for 3 years
IDFC First Bank is offering 7.25 per cent for 3 years
RBL Bank is offering 7.2 per cent for 3 years
Yes Bank is offering 7 per cent for 3 years
According to Saurabh Jain, cofounder and chief executive officer of Stable Money, smaller banks are continuing to use higher deposit rates to attract stable retail money flows.
“Small finance banks continue to offer relatively higher interest rates than larger peers, with rates in the 8.25 per cent-8.3 per cent range for the senior citizen category and around 8.1 per cent for general investors. This reflects a broader trend of smaller banks using competitive pricing to attract stable retail deposits,” Jain said.
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Regular Rates |
Regular Citizen Rates |
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|
Bank Name |
Bank Type |
Special rate |
Special Tenure |
Reg Highest Rate (%) |
Reg Highest Rate Tenure |
Reg 1Y (%) |
Reg 3Y (%) |
Reg 5Y (%) |
Reg 10Y (%) |
|
Bank of Baroda |
PUBLIC_BANK_TYPE |
|
|
6.45 |
444D |
6.1 |
6.25 |
6.3 |
6 |
|
Bank of India |
PUBLIC_BANK_TYPE |
|
|
6.6 |
450D |
6.25 |
6.25 |
6 |
6 |
|
PNB |
PUBLIC_BANK_TYPE |
|
|
6.6 |
444D |
6.25 |
6.3 |
6.1 |
6 |
|
SBI |
PUBLIC_BANK_TYPE |
|
|
6.45 |
444D |
6.25 |
6.3 |
6.05 |
6.05 |
|
Axis Bank |
PRIVATE_BANK_TYPE |
|
|
6.45 |
3Y |
6.25 |
6.45 |
6.45 |
6.45 |
|
Bandhan Bank |
PRIVATE_BANK_TYPE |
|
|
7.25 |
3Y |
7 |
7.25 |
5.85 |
5.85 |
|
FEDERAL BANK LTD. |
PRIVATE_BANK_TYPE |
|
|
6.75 |
3Y |
6.25 |
6.75 |
6.4 |
6.4 |
|
HDFC Bank |
PRIVATE_BANK_TYPE |
|
|
6.5 |
3Y1D-4Y7M |
6.25 |
6.45 |
6.4 |
6.15 |
|
ICICI Bank |
PRIVATE_BANK_TYPE |
|
|
6.5 |
5Y |
6.25 |
6.45 |
6.5 |
6.5 |
|
IDFC First Bank |
PRIVATE_BANK_TYPE |
|
|
7.25 |
3Y |
6.5 |
7.25 |
7.15 |
6 |
|
IndusInd Bank |
PRIVATE_BANK_TYPE |
|
|
7 |
1Y 6M |
6.75 |
6.9 |
6.65 |
6.5 |
|
Kotak Mahindra Bank |
PRIVATE_BANK_TYPE |
|
|
6.8 |
2Y |
6.5 |
6.4 |
6.25 |
6.25 |
|
RBL Bank |
PRIVATE_BANK_TYPE |
|
|
7.2 |
3Y |
7 |
7.2 |
6.7 |
6.7 |
|
South Indian Bank |
PRIVATE_BANK_TYPE |
|
|
6.8 |
2Y |
6.25 |
6.2 |
5.7 |
5.7 |
|
Yes Bank |
PRIVATE_BANK_TYPE |
|
|
7 |
3Y |
6.65 |
7 |
6.75 |
6.75 |
|
AU SF Bank |
SMALL_FINANCE_BANK_TYPE |
|
|
7.1 |
3Y |
6.35 |
7.1 |
6.75 |
6.75 |
|
Jana SF Bank |
SMALL_FINANCE_BANK_TYPE |
|
|
7.77 |
5Y |
7 |
7.5 |
7.77 |
6.5 |
|
Shivalik SF Bank |
SMALL_FINANCE_BANK_TYPE |
7.80% |
1Y10M |
|
|
6 |
6.75 |
6.25 |
|
|
Suryoday SF Bank |
SMALL_FINANCE_BANK_TYPE |
8.10% |
2Y6M |
|
|
7.25 |
|
7.9 |
7.25 |
|
Ujjivan SF Bank |
SMALL_FINANCE_BANK_TYPE |
7.45% |
2Y |
|
|
7.25 |
7.2 |
|
|
|
Unity SF Bank |
SMALL_FINANCE_BANK_TYPE |
7.5% |
1Y |
|
|
7.5 |
6.75 |
6.75 |
|
|
Utkarsh SF Bank |
SMALL_FINANCE_BANK_TYPE |
8.10% |
1Y 301D |
|
|
6 |
7.5 |
7 |
|
|
slice SF Bank |
SMALL_FINANCE_BANK_TYPE |
7.75% |
1Y6M1D |
|
|
6.25 |
7.5 |
7 |
|
|
Bajaj Finance |
NBFC_BANK_TYPE |
7.40% |
3Y |
|
|
6.6 |
7.4 |
7.4 |
NA |
|
Shriram Finance |
NBFC_BANK_TYPE |
7.25% |
3Y |
|
|
6.75 |
7.25 |
7.25 |
NA |
Why shorter FDs are getting attention
The current interest rate cycle has made many depositors cautious about locking money away for very long periods. As a result, many banks are rewarding depositors more for shorter and medium-duration deposits.
Jain said the 1.5-year to 3-year bucket is increasingly becoming attractive for savers because it balances returns and flexibility.
“Another notable trend is the emergence of the 1.5-3 years tenure bracket as a sweet spot. It allows investors to lock in relatively higher rates for a reasonable duration without overcommitting in a potentially evolving rate cycle,” he said.
Should investors chase the highest FD rates?
Higher FD rates can improve returns but financial planners generally advise depositors not to look only at the headline number.
Small finance banks are covered under Deposit Insurance and Credit Guarantee Corporation protection of up to Rs 5 lakh per depositor, including principal and interest. However, investors with large deposits may still prefer diversification across banks instead of concentrating money in one institution.