Highest Deposit Rates: What's the Best Option for Better Returns?

Data from the Reserve Bank of India reveals that weighted average interest rates on new fixed deposits have risen steadily, increasing by 23 basis points in March to 6.48%. This trend has been consistent since May 2022, with rates increasing in 17 of the preceding 18 months. With cost inflation settling within RBI's tolerance band, depositors are now seeking the best deposit rate to lock in, where and for how long. BankBazaar's analysis reveals 71 banks offering 7% or more on retail domestic deposits on select tenors, with 66 banks offering 7.5% or more to senior citizens.

Key Takeaways:

• 71 banks are now paying depositors 7% or more on retail domestic deposits on select tenors.
• 66 banks are offering 7.5% or more to senior citizens, with 29 banks offering 8% or more.
• All government banks are paying 7.35% or less, while two private banks have nudged up to 8%.
• All small finance banks but one are at 8% or higher, with two offering 9% or more.
• Six small finance banks offer 9% or more to senior citizens.
• Most peak rates are on the 1-3-year tenors.
• The ideal tenor depends on when funds are needed, but locking in to the longest available tenors at peak rates is recommended.
• Laddering for better average rates and liquidity at various intervals may not be necessary at peak rates.
• BankBazaar recommends having one FD at the highest rate to ensure better returns for longer.

Statistics:

• Weighted average interest rates on new fixed deposits increased by 23 basis points in March to 6.48%.
• Rates have increased in 17 of the preceding 18 months.
• 517 banks offer 7% or more on retail domestic deposits.
• The maximum deposit insurance limit is Rs 5 lakh, provided by the DICGC, an RBI subsidiary.

Sources:

• Reserve Bank of India
• BankBazaar.com
• Contify.com
• IE Online Media Services Pvt. Ltd.
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