Best fixed deposit rates in India

The evolving economic catastrophe has affected almost every country in the world and India is not an exception. Stock market plunging, prices increasing, inflation, we are hearing this news every day. According to studies, the Indian stock market is one of the worst performing indices in the year 2012. Right now the market is on the negative return track. Individual stocks may have paid out well-but as a whole, investing in stocks is no longer a good notion and is more of a risky in the current scenario.

I personally am a victim of the so called ULIP plans. According to latest NAV rate, the total fund value of my investment is less than what I have paid. Not surprising-since its a market linked product ups and downs are normal. However, not everyone can afford such losses if they have some short term plans in mind. So the question is-do we have a better option, a good investment plan that yields more return for our hard-earned money? Well, for a middle-class family in India, the best choices left are Gold, fixed deposit and systematic mutual fund investing. We will do a comparison of Gold, Mutual fund SIP in our upcoming posts. Now let’s compare the Fixed deposit schemes in India to find out the best one.

RBI is frequently updating the repo/reverse repo rates to restraint inflation and the sky rocketing food prices. However, these measures haven’t changed the situation yet-instead it incited the banks to vary base rate and the lending rates. The base rate is determined after considering many factors, and the bank’s cost of deposits is one key element of it. When the inflation continues at higher rates and when the credit rates are stepped up, value of money or purchasing power of the people, those who have already invested in fixed deposits reduce. Obviously, the banks will have to increase the FD interest rates to continue receiving funds from public. In this projection, the fixed deposit schemes in India turn out to be more valuable than the traditional post office saving account, and secure than equity investment and mutual funds.

Best fixed deposit in India 2012:

Bank                                     90 days   6 month   1 year    3 years    5 years   Tax Saver

Co-Operative Bank                  8.50      9.25       10.00        10.25      10.50      10.50
Tamilnad Mercantile               7.00       8.50        10.25          9.75      10.00      10.00
Karnataka Bank                      5.00       8.50        9.75          9.50        9.50       9.50
City Union bank                      6.00       6.50       10.00           9.75       9.75       9.50
IDBI Bank                              7.00       9.00          9.50          9.50       9.50       9.50
Karur Vysya bank                   7.65       7.65        10.00          9.75        9.50      9.00
SB of Travancore                    7.00       8.75          9.50          9.50       9.50       9.50
South Indian Bank                  4.50       7.00          9.75          9.25       9.50       9.25
Oriental bank                         5.75        9.00         9.60           9.25       9.25      9.50
Punjab & Sind                        7.25        9.00         9.60           9.50       9.25      9.05

*(As of  1 January 2012)

This article is about the best fixed deposit interest rate. You can compare it with the offerings of other Indian banks (SBI, ICICI, HDFC, AXIS, Union, etc.) here. All finance houses promise .25% to .50% extra return for senior citizens opting for long-term plans. The tax saver  scheme permits a maximum deposit of 1L  with income tax benefits under section 80C. They ensure higher returns but premature closure or overdraft is not allowed in any extent. Another thing to note is the high interest rate that some banks provide on 300-600 day deposits. A few good examples are given below with interest rates in the bracket.

Kotak Bank-700 D (9.50), Catholic Syrian Bank-15 months (10.10), South Indian Bank-300 days(10), Yes Bank-480 D (9.60), Dhanalakshmi bank 300D (10.00) 500D (9.75), State Bank of Mysore-500D(9.75), SBT-5o0 days (10.00), SBP-555D(9.75), Federal Bank-500days (10.00), Syndicate bank-364D (9.75).

It is perceptible from the table that the best fixed deposit rate in India is offered by Kerala State Co-Operative bank. So if you deposit 5L in KSCOB for five years, the final amount will be around 8.40L leaving out the future interest revisions. The same amount when invested in HDFC bank yields only 7. 5L. Nevertheless, rates should not be the underline for selecting your banking partner-the service, areas served, customer support, etc. is too important. When these factors are satisfactory, an above nine interest rates can be treated as a good fixed deposit scheme.