Fixed Deposit Interest Rates See Gradual Increase, Small Finance Banks Lead

Indian savers are witnessing a gradual rise in fixed deposit (FD) interest rates, especially for 3-year terms, with some reaching 7.65%. Utkarsh Small Finance Bank offers the highest rate at 7.65% for a 3-year FD. Other small finance banks like Slice, Jana, Suryoday, and AU offer competitive rates between 7.10% and 7.50%. Experts advise caution with small finance banks, recommending deposits stay within the Rs 5 lakh DICGC insurance limit due to their different operating model.

Private sector banks provide competitive options, with RBL Bank at 7.20%, SBM Bank India at 7.10%, and Bandhan Bank, Yes Bank, DCB Bank offering 7%. Leading banks like ICICI and Axis Bank offer 6.60%.

Public sector banks offer stability with moderate returns. Union Bank of India leads at 6.60% for a 3-year FD, followed by Bank of Baroda (6.50%), PNB (6.40%), and State Bank of India (6.30%).

Impact: This trend offers investors better returns on safe investments. Savers can choose based on risk tolerance: higher yields from SFBs (within DICGC limits) or greater stability from private/public banks. Rising rates make FDs attractive for predictable income. Impact Rating: 6/10

Difficult Terms: Fixed Deposit (FD): Deposit money for a fixed period to earn interest. Small Finance Bank (SFB): Bank for unserved/underserved segments. DICGC: Insures bank deposits up to Rs 5 lakh. Principal: Original deposit amount. Maturity Amount: Total amount at period end. Private Sector Banks: Privately owned banks. Public Sector Banks: Government-owned banks.