During these periods of unpredicted business events bank’s Fixed Deposits provide some relief to the customers. Equity and debt markets are controlled by fluctuations. As returns are certain investors prefer fixed deposits over other forms of investments.
Fixed deposits are more preferred by assessee falling in lower tax brackets because by investing in fixed deposits their chance of losing principals is too less while tax outgo remains low. Tax saving fixed deposits are very popular among customers as certain conservative investors opt for getting tax benefits under section 80C of the Income Tax Act for these fixed deposits. As per section 80C of the Income Tax Act, a maximum deduction of up to Rs.1,50,000 lakh from the assessee’s total taxable income is available. However, taxes saving fixed deposits are for 5 years provided premature withdrawals are not allowed.
Though most of the bank’s fixed deposits offer low-interest rates, DCB Bank and IndusInd Bank are offering a better rate for their customers. DCB Bank is leading with 6.95% interest. Private sector banks like IndusInd Bank, RBL (Ratnakar Bank Limited), Yes BANK, and Karur Vysya Bank are also among the top private banks that provide better interest rates. Their interest rates for fixed deposits are near 6% to 6.75 %. In the case of public sector banks, maximum interest is provided by SBI (State Bank of India) which accounts for 5.40%. SBI is followed by Canara Bank and Bank of India with 5.30% interest rates for tax-saving fixed deposits. Interest offered by Bank of Baroda on tax-saving deposits is 5.25% which also reaches the satisfactory level of the customers.
For a deposit of Rs.1,50,000 with DCB Bank, will generate Rs.2,12,000 lakh after 5 years. In the case of SBI where the interest rate is 5.40% a deposit of Rs. 1,50,000 lakh will grow only up to R. 1,96,000 lakh after 5 years of deposits.
For attracting customers and depositors smaller private banks are offering higher interest rates while government-owned banks offer a comparatively lower rate of interest. Even though smaller banks offer a high rate of interest responsible customers always look for larger banks with strong management and financials along with considering interest rates offered by various banks.