The State Bank of India (SBI) offers retail investors two limited-time fixed deposits (FDs) with higher interest rates than other regular fixed deposits. These include the SBI We-care deposit scheme for senior citizens and the Amrit Kalash deposit scheme for all retail investors, including senior citizens. Let us explore the features of these deposit schemes, the comparison of interest rates with FDs of other banks, and whether you should invest.
Amrit Kalash deposit scheme
The Amrit Kalash deposit scheme is a specific tenor FD offered with a tenure of 400 days. The interest rate offered on this FD is 7.10% p.a. (as of 13th March 2024). The interest rate on other FDs of similar tenure (1 year to less than 2 years) is 6.80% p.a. Senior citizens are eligible for an interest rate of 7.60% p.a. on the Amrit Kalash FD.
The scheme is applicable for new and renewal of existing deposits. You can apply for the FD through a SBI branch, internet banking, or the YONO App. The depositor can avail of a loan against the FD.
Also Read: How to Open a Fixed Deposit without a Bank Account – Standalone FD
We-care deposit scheme
The We-care deposit scheme is specifically for senior citizens. SBI’s purpose of introducing this FD is to protect the income of senior citizens by providing them additional interest on their term deposits. The minimum tenure of the FD is 5 years, and the maximum tenure is 10 years. The interest rate offered on this FD is 7.5% p.a. Other depositors (age less than 60 years) get an interest rate of 6.5% p.a. on FDs of similar tenure. So, senior citizens get an additional interest rate of 100 basis points or 1% on the We-care FD.
The scheme is applicable for new and renewal of existing deposits. You can apply for the FD through a SBI branch, internet banking, or the YONO App. The depositor can avail of a loan against the FD.
The Amrit Kalash and We-care deposit schemes are available for investment till 31st March 2024.
Comparison of SBI Amrit Kalash FD interest rates with other banks
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Source: Respective bank websites.
Note: The above data is as of 13th March 2024
The above table shows the SBI FD rates for the Amrit Kalash scheme are better than ICICI Bank and HDFC Bank FDs for similar tenures. So, if you are comfortable investing in FDs of large banks, you may go with SBI.
However, the SBI FD rates for the Amrit Kalash scheme are lower than small finance bank FDs for similar tenures. If you feel it is risky to invest in FDs of small finance banks, you can limit the investment amount to Rs. 5 lakhs. Please note that DICGC insures all customer deposits and interest with each bank up to Rs. 5 lakhs. DICGC, or Deposit Insurance and Credit Guarantee Corporation, is a subsidiary of the RBI. The respective banks pay the premium for the deposits.
Comparison of SBI We-care FD interest rates with other banks
View Full Image
Source: Respective bank websites.
Note: The above data is as of 13th March 2024
The above table shows the HDFC Bank FD interest rate of 7.75% p.a. The 5-10 year tenure is better by 25 basis points (0.25%) than the SBI We-care FD rate of 7.50% p.a. The Capital Small Finance Bank FD rate of 7.60% p.a. is slightly better, and the ICICI Bank FD rate of 7.50% p.a. is at par with the SBI We-care FD rate. Hence, if you are a senior citizen and want a longer tenure FD of 5-10 years, you may open the FD with HDFC Bank.
Should you lock into high FD rates?
As of March 2024, many Indian banks offer fixed deposit interest rates that are either at multi-year or decadal highs. However, these high interest rates may not last for too long. Inflation in the US, India, and many other economies has been trending lower from the multi-year highs it touched in 2022-23.
The February 2024 CPI inflation rate for India came in at 5.09%. It is within the RBI tolerance band of 4-6%. The US Federal Reserve may start cutting US interest rates in the second half of 2024. The RBI may also follow with interest rate cuts in India. Following the RBI, the banks will also cut fixed deposit rates. Hence, if you are looking to invest in FDs, it is a good time to lock into the current high interest rates, as they may not last for too long.
Apart from FDs, high interest rates are available on government securities, debt mutual funds, government small savings schemes, corporate bonds, etc. However, evaluate each financial product based on the risks involved, returns offered, liquidity, tax benefits, investment tenure, etc. After evaluating these factors, decide whether you should go ahead with the investment.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.
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Published: 14 Mar 2024, 11:46 AM IST