A series of both private and public banks are offering interest rates between 6.80 and 7.40% on fixed deposits (FDs) of amounts less than ₹3 crore and for a tenure of five years.
Fixed deposits are a hugely popular way of growing money since they assure fixed returns and aren’t influenced by volatility like the stock market is.
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Interest rates on FDs offered by various banks
For general citizens, the following table shows the rate of interest offered by various banks for a 5-year tenure in descending order.
| Bank name | Interest rate (5 years) |
|---|---|
| DCB Bank | 7.40% |
| IndusInd Bank | 7.25% |
| YES Bank | 7.25% |
| RBL Bank | 7.10% |
| Federal Bank | 7.10% |
| Axis Bank | 7% |
| Karur Vysya Bank | 7% |
| HDFC Bank | 7% |
| ICICI Bank | 7% |
| Bank of Baroda | 6.80% |
Source: paisabazaar.com as of December 12, 2024
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DCB bank offers the highest rate on FDs less than ₹3 crore at 7.40%, followed by IndusInd bank and Yes Bank at 7.25%, and RBL Bank and Federal Bank at 7.10%.
HDFC Bank, India’s largest bank, offers 7% while Bank of Baroda offers the least interest rate at 6.80%.
It must be noted that the interest rates for senior citizens will be much higher.
This interest is calculated at quarterly compounding intervals on Term Deposits and paid at the rate decided by the bank depending upon the period of deposits.
For monthly deposit scheme, the interest will be calculated for the quarter on compounding basis and paid monthly at discounted value.
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What about premature withdrawal of the FD?
The Bank of Baroda website states that “No penalty for premature payment will be levied in case of premature payment of deposits up to ₹5 lacs provided it remained with the bank for a minimum period of 12 months.”
However, interest will paid after deducting a penalty of 1% from such applicable rate or the contracted rate, whichever is lower in the cases which are subject to charging penalty.
When it comes to premature closure of Deposits of ₹1 crore and above, it needs a 31 days prior notice, and may be subject to penalty of 1.5% on applicable rate of interest for the period for which the deposit has remained with the bank, the report read.