Unity Small Finance Bank has increased interest rates on savings accounts and fixed deposits effective August 1, 2026. General customers can now earn up to 8% on fixed deposits, while senior citizens can secure up to 8.5%. The move aims to attract more retail deposits in a competitive banking environment where banks are actively competing for funds to support loan growth.
Unity Small Finance Bank has updated its interest rate structure for retail depositors, effective August 1, 2026. The bank is offering higher returns on both savings accounts and fixed deposits to strengthen its deposit base. For savings accounts, the bank has introduced a tiered system where balances exceeding ₹5 lakh now earn 7% per annum. Deposits between ₹1 lakh and ₹5 lakh earn 6%, while balances up to ₹1 lakh continue to earn 4.5%. Interest on these savings accounts is calculated and credited on a monthly basis.
Competitive Fixed Deposit Offerings
The bank has also introduced a specialized fixed deposit tenure of 501 days. General customers can earn 8% per annum on deposits under ₹3 crore for this period. Senior citizens are eligible for a higher rate of 8.5% for the same 501-day tenure. These rates are part of a broader adjustment where the bank is offering varied returns based on the maturity period. For most other tenures ranging from 12 to 18 months, general customers can expect rates between 6.5% and 7%, with senior citizens receiving an additional benefit of 0.5%.
Context for Retail Depositors
Banks frequently adjust their deposit rates to manage their liquidity and meet credit demand. By offering higher rates, Unity Small Finance Bank is working to improve its ability to fund future lending operations. For investors and savers, it is important to note that all deposits at the bank are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC). This insurance provides protection for deposits up to ₹5 lakh per depositor in the event of a bank failure.
As the banking sector faces competition for retail funds, depositors often compare these rates with those offered by larger commercial banks and other small finance banks. While the 8.5% rate for senior citizens is attractive, the actual benefit depends on the specific tenure and the total amount invested. Investors may track how the bank manages its cost of funds and whether this move results in a higher deposit inflow in the coming quarters. The next key update to watch will be the bank's upcoming financial results, which will provide insight into how these increased interest costs affect its net interest margin, a key measure of a bank's profitability.