Fixed Deposits Shine Amid Market Jitters: Earn Up To 9% Return With These Bank FDs
At present, there are several small finance banks (SFBs) that offer attractive FD returns up to 9%. Some names include Unity Small Finance Bank and North East Small Finance Bank.
Traditional savings schemes like Fixed Deposits (FDs) are back in the spotlight as investors have started exploring safer investment avenues amid the ongoing slowdown in the stock markets. In the last few weeks, Indian stock markets have remained volatile due to heavy sell-off by the Foreign Institutional Investors (FIIs) and the global uncertainties over the US tariffs issue.
While investors with higher risk tolerance prefer the stock market for higher returns over traditional options like FDs, small savings schemes and government-backed debt instruments, recent volatility has forced many to reconsider their investment strategies.
A Fixed Deposit, also known as a term or time deposit, is a scheme to allow investors to park their money for a pre-defined period. During the FD tenure, the money earns fixed interest annually till maturity. Generally, the FDs provide marginally higher returns compared to savings accounts.
Fixed Deposits Outshine Market Returns
Offering consistent returns, FDs have outpaced the unpredictable stock market, highlighting the importance of diversifying investments. Benchmark Nifty50 has dropped more than 14% from its all-time high of 26,277 hit on Sept. 27, 2024, to 22,460.30 levels currently.
In this scenario, the idiom "don't put all your eggs in one basket" has gained renewed attention, with financial experts advising to diversify investments across FDs, gold and other investment avenues.
Small Finance Banks Lead Fixed Deposit Return Rates
At present, there are several small finance banks (SFBs) that offer attractive FD returns up to 9%. Some names include Unity Small Finance Bank and North East Small Finance Bank. Investors can also opt for FDs at PSU or private banks, but the interest rates may not be as competitive as the small finance banks.
For instance, the State Bank of India offers an interest rate of 7.25% for a 444-day FD. Similarly, Indian Bank, Bank of India, and Bank of Baroda provide similar rates around 7.30% for 400-day tenures.
Small finance banks are regulated by the Reserve Bank of India (RBI) and are primarily aimed at offering basic banking services to unserved and underserved sections such as farmers and small businesses. While they are dubbed as ‘savings vehicles’, SFBs also offer services such as credit facilities, among others
