Nine small finance banks that offer best interest rate on 3 year RD
The rates small finance banks offer are as high as 7.2% for the tenure of 3 years. All nine SFBs are offering interest rates between 6.2% and 7.2%.
In any crisis like the one we are passing through, the search for higher returns is on everybody’s minds. The search however, leads one to small finance banks that offer higher interest rates than the public sector and private sector banks. Investment planners often endorse recurring deposits for medium-term time frames. Money9 brings the interest rates that are available for RDs for a 3-year tenure.
7.2% for 3-year RD
The rates small finance banks offer are as high as 7.2% for the tenure of 3 years. All nine SFBs are offering interest rates between 6.2% and 7.2%. This rate is quite high compared to commercial banks.
Fincare SFB offers 7.2% which is the highest in the country, is followed by Utkarsh SFB that offers 7%. Ujjivan and North East SFB offer 6.75% while Jana and Shivalik SFB offer 6.5% interest rate for 3-year FD.
Equitas SFB gives 6.35% for 3-year tenure, while AU and Suryoday SFB offer 6.25%, which is the lowest among SFBs.
Nine Small Finance Banks
| Banks | Percentage (%) |
| Jana | 6.50 |
| Utkarsh | 7.00 |
| AU | 6.25 |
| Ujjivan | 6.75 |
| Equitas | 6.35 |
| NE | 6.75 |
| Shivalik | 6.50 |
| Fincare | 7.20 |
| Suryoday | 6.25 |
Commercial banks
On the other hand, large commercial banks are offering lower RD interest rates. This rate varies between 5% and 6% for most of these banks.
Among all commercial banks private lender Yes Bank offers 6.25% and IndusInd offers 6% interest rate for 3-year RD. Bandhan Bank offers 5.75%, while private lender DBS offers 5.5% for 3-year RDs. Other large lenders such as SBI, HDFC, BoB, PNB, Indian bank all are offering interest rate as low 5%-5.3%.
Nine commercial banks
| Banks | Percentage (%) |
| IndusInd | 6.00 |
| Yes | 6.25 |
| Bandhan | 5.75 |
| Indian | 5.15 |
| DBS | 5.50 |
| HDFC | 5.15 |
| SBI | 5.10 |
| BOB | 5.30 |
| ICICI | 5.15 |
Things you should know
Tax on RD is deducted at source. It is levied at 10% only on the interest if the principal is more than Rs 40,000. If the principal is below Rs 40,000, no tax is chargeable.
RBI has created the category of small finance banks in the last few years mainly to serve small business units, small and marginal farmers, micro and small industries and unorganised sector entities.
The first small finance bank to get the license from RBI was Capital Small Finance Bank. It got the license in April 2016.
A total of 10 small finance banks are operating in the country. These are AU Small Finance Bank, Equitas Small Finance Bank, Suryoday Small Finance Bank, Ujjivan Small Finance Bank, Utkarsh Small Finance Bank, Jana Small Finance Bank, North East Small Finance Bank, ESAF Small Finance Bank, Fincare Small Finance Bank and Capital Small Finance Bank.