Up to 7.65% interest on 3-year FDs: These small and public sector banks are offering the best returns...

If you want a safe investment with stable returns, then a fixed deposit (FD) remains a reliable option. The fixed interest rate and security of funds make it a preferred choice for investors of all ages. FDs are especially a good option for senior citizens and investors who want to avoid market risk. Currently, many banks are offering attractive interest rates on three-year FDs, with small finance banks leading the way.

Small Finance Banks Offering the Highest Interest
Small finance banks have increased their FD interest rates in the past few months. Among these banks, Utkarsh Small Finance Bank is currently leading, offering up to 7.65% interest on 3-year FDs. Jana Small Finance Bank and Slice Small Finance Bank are offering interest rates of 7.50%. Suryaday Small Finance Bank is offering 7.25%, and AU Small Finance Bank is offering 7.10%.

While small finance banks typically offer higher interest rates than larger banks because they need to attract deposits, it's important to exercise caution when investing in them, as they operate on a smaller scale.

It's worth noting that deposits up to ₹5 lakh in these banks are insured under the DICGC (Deposit Insurance and Credit Guarantee Corporation). This means that even if the bank is affected for some reason, the amount up to ₹5 lakh remains protected. However, investors are advised not to keep more than this amount in a single bank.

Bank Name Interest Rate on 3-Year FD (%)
Utkarsh Small Finance Bank 7.65
Slice Small Finance Bank 7.50
Jana Small Finance Bank 7.50

Suryaday Small Finance Bank 7.25
AU Small Finance Bank 7.10
Ujjivan Small Finance Bank 7.20
Interest Rates of Private Sector Banks
If you don't want to invest in a small finance bank, private sector banks are also offering attractive returns. RBL Bank leads the category, offering 7.20% interest on a 3-year FD. SBM Bank India offers 7.10%, while YES Bank, Bandhan Bank, and DCB Bank offer 7%.

Among these banks, ICICI Bank and Axis Bank offer 6.60%, while HDFC Bank offers 6.45%. Private banks offer better digital access and flexibility, making them a good option for investors seeking better returns with a moderate risk appetite.

3-Year FD Rates at Private Sector Banks
RBL Bank tops the list with an interest rate of 7.20%. SBM Bank India is followed by YES Bank, DCB Bank, and Bandhan Bank at 7%. ICICI Bank and Axis Bank offer 6.60%, while HDFC Bank offers 6.45%.

Bank Name 3-Year FD Interest (%)
RBL Bank 7.20
SBM Bank India 7.10
YES Bank 7.00
DCB Bank 7.00
Bandhan Bank 7.00
ICICI Bank 6.60
HDFC Bank 6.45

Returns at Public Sector Banks are Slightly Lower, but Reliable
Interest rates at public sector banks are slightly lower, but they are considered the safest. Currently, Union Bank of India offers 6.60% interest on a 3-year FD. Bank of Baroda is offering 6.50% interest, and Punjab National Bank (PNB) is offering 6.40%. State Bank of India (SBI), the country's largest bank, is offering 6.30% interest on 3-year FDs.

Public sector banks have a large network and are also guaranteed by the government, making FDs with these banks a better option for those who want to avoid risk.

Bank Name 3-Year FD Interest (%)
Union Bank of India 6.60
Bank of Baroda 6.50
Punjab National Bank 6.40
State Bank of India 6.30
Bank of India 6.25

Things to consider before investing
Even minor changes in FD rates can impact your total returns.
Be sure to check the latest interest rates of all major banks before investing.
Avoid investing more than ₹5 lakh in small finance banks.
Locking in the interest rate on a long-term FD is a wise move.

Adopting an FD ladder strategy by creating FDs across different banks can be beneficial for both good returns and liquidity.

Conclusion
If you want stable, safe, and assured returns, a 3-year FD may be a better option. While small finance banks offer higher interest rates, public sector banks offer a reliable guarantee. Investors should choose the right bank based on their needs, risk tolerance, and financial goals.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.