INVESTING IN FDS? BANKS NOW OFFER INTEREST RATES UP TO 8.10% ON 444 DAY SCHEME; CHECK LIST

Are you planning to invest in fixed deposits, but wondering which bank offers the best interest rate?

While many banks have recently lowered their FD rates following the Reserve Bank of India’s repo rate cut, several public, private, and small finance banks are still offering highly competitive returns, especially on special 444-day deposit schemes.

Some of these rates go as high as 8.10% for senior citizens, as per an ET report, making it a golden opportunity for those looking to grow their savings securely.

These special FD schemes present a timely opportunity for investors to lock in higher returns before rates fall further.

Here’s a look at some options available for both regular and senior citizen investors, offering the best FD rates on 444-day deposits:

Special deposit schemes by leading banks

• State Bank of India: SBI, under its Amrit Vrishti scheme offers 6.60% for general depositors, 7.10% for senior citizens, and an extra 10 basis points for super senior citizens.
• Bank of Baroda: BoB, through its bob Square Drive Deposit Scheme, also offers 6.60% for regular customers and 7.10% for seniors.
• Indian Bank: It offers 6.90% for general investors and 7.40% for senior citizens under its IND SECURE plan. Super senior citizens can earn as much as 7.65%. These rates are valid until 30 September 2025.
• Canara Bank: It offers 6.60% to regular citizens and 7.10% to seniors.

High-yield options from other banks

• ESAF Small Finance Bank leads with 7.60% for regular depositors and 8.10% for seniors, the highest on the market currently.
• Karur Vysya Bank offers 6.85% for general customers and 7.25% for seniors.
• Indian Overseas Bank gives 6.95% and 7.45%, respectively.
• Punjab & Sind Bank offers 7.05% for regular customers and 7.55% for seniors.
• Federal Bank provides 6.85% to regular customers and 7.35% to seniors, according to data provided by Paisabazaar.

Early withdrawals and TDS rules

Withdrawal: Fixed deposits can be withdrawn before maturity if they are booked under callable options. However, banks typically impose a penalty of 0.50% to 1% on early withdrawals. The exact penalty amount depends on the bank’s policy. Some banks waive this penalty for senior citizens or under specific conditions, such as medical emergencies or if the deposit has been held for a minimum duration.

TDS: Regarding tax, a Tax Deduction at Source (TDS) is applicable when the interest earned on FDs or recurring deposits exceeds Rs 50,000 in a financial year (Rs 1 lakh for senior citizens). A TDS certificate detailing the tax deducted during the quarter will be sent at the end of each quarter of the financial year.

It’s important to note that TDS can slightly impact your final maturity amount, especially in reinvestment deposits. According to the HDFC Bank website, in case of reinvestment deposits, interest is reinvested after TDS is deducted. As a result, the final maturity amount may vary depending on the amount of tax deducted and the impact of reduced compounding on that tax amount over the remaining tenure.