For senior citizens looking to invest in a Fixed Deposit (FD), this may be a good opportunity to do so, as some banks are still offering attractive interest rates. Although the Reserve Bank of India (RBI) recently cut its repo rate by 25 basis points, some banks are still offering interest rates as high as 9.1% on 5-year FDs. Here are some banks that are currently offering high interest rates to senior citizens:
* Suryoday Small Finance Bank: 9.1% interest rate on 5-year FDs
* Unity Small Finance Bank: 8.65% interest rate on 5-year term FDs
* Northeast Small Finance Bank: 8.5% interest rate on 5-year FDs
* Utkarsh Small Finance Bank: 8.35% interest rate on 5-year fixed deposits
* Jana Small Finance Bank: 8.2% interest rate on 5-year FDs
In addition to earning interest on their FDs, senior citizens can also take advantage of tax benefits. Under the old tax regime, investing in 5-year FDs can provide a tax exemption of up to Rs 1.5 lakh under Section 80C. However, under the new tax regime, this exemption is not available. Senior citizens can also avail an exemption on interest income of up to Rs 50,000 every financial year under Section 80TTB.
It is important to note that deposits in small finance banks are insured up to Rs 5 lakh by the Deposit Insurance Credit Guarantee Corporation (DICGC). However, experts advise investors to carefully consider the risks and decide on the limit of their investment accordingly, as the business model of these banks may differ from traditional banks.
Overall, for senior citizens, investing in FDs can be a good way to earn a steady return, while also taking advantage of tax benefits. However, it is essential to carefully review the terms and conditions of the FD and assess the risks involved before making a decision.