Can you bank on small finance banks to help your money grow?

Whenever there are discussions about investment without risk and assured returns, the first thing that comes to mind is Fixed Deposit (FD). However, there are many options within FDs, including government banks, private banks, cooperative banks, small finance banks and corporate FDs. Speaking of banks, small finance banks are offering the highest interest rates. Interest rates ranging from 7 days to 10 years are being offered on FDs up to Rs 2 crore.

Let’s see how much interest is being offered in the FDs of the top 5 small finance banks? And how secure is the FD of a small finance bank?

First, let’s talk about Unity Small Finance Bank. This bank is offering an annual interest of 4.5% on FDs ranging from 7 to 14 days. From 6 months to 201 days, an interest of 8.50% is being offered on FDs. Unity Small Finance Bank is offering the highest interest of 8.95% on a 701-day FD. An additional half percent interest is being offered for senior citizens. Therefore, senior citizens can earn an annual interest of 9.45% by investing in a 701-day FD.

Next is Suryoday Small Finance Bank. This bank is offering 4% interest on FDs up to 14 days and 5.5% interest on FDs from 6 to 9 months. Interest rates are 8.5% for deposits less than or equal to 15 months and 8.25% for a 5-year FD. Senior citizens can earn a return of 9.10% by investing in a 2 years 2 days FD.

Let’s talk about Equitas Finance Bank at number three. This bank is offering interest rates ranging from 3.50% to 8.50% on FDs of various tenures. The interest rate is 6.25% for FDs ranging from 181 days to one year. The highest interest of 8.50% is on a 444-day FD. Interest rates for senior citizens range from 4% to 9%.

On the fourth spot, comes AU Small Finance Bank. AU Small Finance Bank is a major bank in the category of small banks. It is offering interest rates ranging from 3.75% to 8% on FDs ranging from seven days to 10 years. The highest interest is 8% on an 18-month FD. Senior citizens are getting an interest of 8.50% on this FD.

On the fifth spot is Utkarsh Small Finance Bank. This bank is offering 4% interest on FDs ranging from seven days to 45 days. An interest of 8% is being offered on FDs from 365 to 699 days. Interestingly, senior citizens can earn 0.88% more, i.e., 8.88% interest.

The country’s largest government bank, SBI, is offering interest rates ranging from 3.50% to 7% on FDs of various tenures. Compared to large banks, small finance banks are offering significantly higher interest rates. Unity Small Bank is offering the highest interest rates at 8.95%, followed by Suryoday Bank at 8.65%, Equitas at 8.50%, AU Small Finance Bank at 8% and Utkarsh Finance Bank at 8.50%. For senior citizens, these banks are offering 0.5% to 0.88% more interest. Thus, compared to SBI, small finance banks are offering nearly two and a half percent higher interest rates.

So, how are small banks able to offer higher interest rates than large banks?

Banking expert Suresh Bansal says that there is no control by the RBI on the interest rates of savings accounts and FDs of banks. Banks can determine interest rates as per their discretion. Small finance banks manage better with fewer staff and limited resources. Due to lower operating costs, these banks are offering higher interest rates compared to large banks.

Like large banks, small finance banks are also under the control of the RBI. Like large banks, deposits up to five lakh rupees in small finance banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). In this way, your money in small finance banks is as safe as it is in the country’s major commercial banks. You can invest in the FDs of these banks without any fear.