3 banks promising over 9% returns on FDs for senior citizens: Should you invest?

Unity Small Finance Bank FD

on fixed deposits of less than 2 Crore, Unity Small Finance Bank hiked its interest rates on 15 February 2023. On deposit tenure of 1001 days, the bank is now promising a maximum interest rate of 9.50% for senior citizens and 9% for general public. And on two different tenures of 181-201 days and 501 days, the bank is offering a standard rate of 8.75% and 9.25% for senior citizens.

Utkarsh Small Finance Bank FD

Utkarsh Small Finance Bank has increased the interest rates on fixed deposits of less than 2 crores on 27 February 2023. On deposit tenure of 700 days, the bank is offering a maximum interest rate of 8.25% to general public and 9.00% to senior citizens.

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Fincare Small Finance Bank FD

On March 24, 2023, the bank increased its interest rates on fixed deposits of less than 2 crores. The general public will get a maximum return of 8.41% over a deposit period of 1000 days while senior citizens can earn 9.01%.

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Should you invest in Small Finance Bank FD?

Let us take opinion from various industry experts on whether one should invest in Small Finance Bank FD or not.

Govind Singh, MD & CEO, Utkarsh Small Finance Bank

Yes, it is a good time for senior citizens to invest and take advantage of the interest rates offered by the bank. This will help in long term wealth creation with assurance and security of the money deposited by senior citizens.

CA Manish P. Hinger is the Founder at Fintoo

Globally, interest rates are rising and the Reserve Bank of India (RBI) has also increased its repo rates by 250 basis points from May 2022 to February 2023, from 4.0% to 6.5%. This has increased the interest rates offered by banks on fixed deposits. Currently, Indian banks offer interest rates ranging from 7% to 8.5% for medium to long-term fixed deposits, with small finance banks such as Unity SFB, Utkarsh SFB and Fincare SFB offering as high as 9% for senior citizens. offer rate. However, whether it is safe to invest in these high-interest rate fixed deposits from small savings banks depends on the risk involved.

Investors should understand that higher returns are generally associated with higher risk, and this risk cannot be ignored when making investment decisions. While past returns and events are important considerations, they cannot be relied upon completely. For example, Punjab and Sind Bank and Maharashtra Cooperative Bank were popular choices for Indian investors, but when these banks closed, investors panicked and their money got stuck with the banks. According to SBI data, deposits in India’s regional rural banks are insured to the extent of 82.9%, while the figure is 66.5% for cooperative and local area banks and 76.4% for other types of banks.

Senior citizens are often more conservative and have a moderate risk profile, and thus, it is not advisable for them to invest in fixed deposits of small finance banks just because of the higher interest rates. It is recommended that investors, especially senior citizens, stick with large banks when it comes to investing in fixed deposits. Additionally, senior citizens can also consider investing in small savings schemes such as the Senior Citizens Savings Scheme or National Savings Certificates, which offer assured returns along with government security.

Investing in Fixed Deposits is suitable for investors seeking guaranteed returns with low risk but factors such as age, income, expenses, risk appetite, financial goals and investment horizon should be kept in mind. Fixed deposits do not offer inflation-adjusted returns and do not help in building wealth through capital growth over the long term, hence there is no point in investing all your savings in fixed deposits.