Declining Fixed deposits Rates – Which one best
Nationalised banks or Private banks
Since last one month
interest rate on fix deposit have been declining. Now the big question for
investors where should they park their money ? These are those investor for whom capital protection is top priority.
Now the option whether they should go with Nationalised banks or Private banks.
A lot of information about
this question is available online and print media also. People often ask me
also where they should invest for higher interest rates to lock their savings
for one year or more. Over the last one month, long-term fixed deposits (FD)
rates have been on a decline. The largest bank of the country State Bank Of
India (SBI) has already reduced interest rates, which now stands at 8.5% p.a.
for any FD term of one to ten year. The long-term FD rates of SBI are less
competitive compared to many other nationalised banks, which still give
9.25%-9.35% p.a.
The bigger private sector banks
like ICICI Bank, HDFC Bank and Axis Bank also moved quickly towards to reduce
their rates. In general these banks often slightly more interest rate offer
than SBI. The maximum rates with ICICI Bank and HDFC Bank are 8.75% p.a.; while
Axis Bank offers 9% p.a. It means nationalised banks are still a better bet for
higher interest rates when compared to big private banks as they are offering
9.25%-9.35%.
Smaller private bank like Kotak Mahindra Bank, YES Bank, Karur Vysya Bank
and IndusInd bank lowered their rates to 9%-9.25% p.a. The cooperative bank
like Saraswat Bank was offering 10% simple interest paid quarterly, which is
now reduced to 9.25%. While locking at 10% is not possible today from well
known banks, nationalised banks can get you 9.3% to 9.35% interest for a FD of
one to two years tenure, which is a good option. Few cooperative banks are
offering 9.75% to 10.25% on FDs today. But safety of your funds should have
higher priority than 0.5% to 1% more interest. And these banks charge
higher penalties for premature withdrawal and therefore liquidity of the FD
before maturity can be a concern. Some bank’s fix deposit rate as given below:
If you have any query regarding investment please feel free
to ask.
Regards,
Arvind Trivedi
Certified Financial Planner
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