The Reserve Bank of India’s recent 25 basis points cut in the repo rate has triggered a surge in interest rates offered by small finance banks (SFBs), making them attractive options for fixed deposit (FD) investors seeking higher returns. These SFBs, designed to promote financial inclusion, are now offering competitive rates, with some exceeding 9% for specific tenures. Here’s a breakdown of the top SFBs offering attractive FD rates:
* Unity Small Finance Bank: 9% for deposits with a tenure of 1001 days and 7.85% for one-year FDs
* NorthEast Small Finance Bank: 9% for deposits ranging from 18 months to 36 months and 7% for one-year FDs
* Suryoday Small Finance Bank: 8.6% for five-year deposits and 8.25% for one-year FDs
* Utkarsh Small Finance Bank: 8.5% for deposits of 2-3 years and 8% for one-year FDs
* ESAF Small Finance Bank: 8.38% for 888-day deposits, although their one-year option is lower at 6%
It’s essential to note that deposits in SFBs are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh, providing a safety net for depositors. However, experts advise caution when investing in these banks, which operate under different regulations than traditional commercial banks. To mitigate risks, investors are recommended to limit their deposits to the insurer’s coverage, ensuring the safety of their investments while still benefiting from the higher interest rates offered by these institutions.