COMPARATIVE

ANALYSIS OF INDIAN
BANKS WITH RESPECT
TO FIXED DEPOSIT
VARIANTS.
WHAT IS A FIXED DEPOSIT (FD) ACCOUNT?

• Fixed deposit accounts are an investment instrument offered by banks and other financial institutions.
• Under this account, investors would deposit a lump sum over a period. In return, they would get a fixed
rate of interest throughout the investment tenure.
• The rate of interest provided on FDs is much higher than that of a regular savings bank account.
• Once the tenure of the deposit ends, investors can withdraw their investment. On the other hand, they
have a choice of reinvesting their money for another term.
• All scheduled commercial banks and some NBFCs and HFCs in India offer fixed deposit accounts. If you
are to invest in FDs provided by an NBFC or HFC, then check the ratings of the financial institution
provided by agencies, such as CRISIL. This is to make sure that your money is safe.
• Private sector banks and other financial institutions may offer a slightly higher rate of interest than the
public sector banks.
FEATURES AND BENEFITS OF FD ACCOUNTS:

•The investment tenure of FDs ranges from seven days up to ten years, and it varies across banks.
•The return on investment is compounded periodically; it may be monthly, quarterly, or annually.
•Senior citizens are provided with 0.5% higher returns as compared to regular customers.
•Partial and premature withdrawals may be permitted with penalties.
•Taxpayers can invest in tax-saver FD schemes to save taxes under Section 80C of the Income Tax Act, 1961.
•Upon maturity of the FD account, investors can reinvest the sum for another term.
•Loan against FDs is available.
•Investors will accumulate higher returns if they invest for an extended period.
•Returns are assured as they are not tied with the market highs and lows as in the case of mutual funds.
•The investment is safe as banks and other financial institutions are always under the purview of the Reserve
Bank of India (RBI).
•Compounded interest makes your investment grow at a much faster rate.
•Premature withdrawals are allowed, so you will always have a corpus to fall back on at times of crisis.
 FD OR ELSS – WHICH IS THE BEST?

Characteristics Fixed Deposit (FD) Account Equity-Linked Savings Scheme (ELSS)

Mechanism A lump sum is deposited for a specified period that A type of mutual fund where a lump sum is invested where the
attracts a fixed interest rate returns are subject to market fluctuations

Risk Associated Little to no risk Low to high risk

Returns Guaranteed and predictable Not guaranteed and unpredictable

Lock-in Period Minimum of 5 years Minimum of 3 years

Taxability on Returns Interest income is fully taxable Dividend earned is not taxable

Loan Facility Loan available on the deposit amount No loan facility

 COMPARATIVE ANALYSIS OF INDIAN BANKS WITH RESPECT TO FIXED
DEPOSIT VARIANTS.

Banks FD Interest Rates Senior Citizen FD Interest Rates Tenure

PNB Housing Finance 5.90% - 6.70% 6.15% - 6.95% 12 months to 120 months

HDFC 5.75% - 6.25% 6.00% - 6.50% 33 months to 99 months

Bajaj Finance 5.65% - 6.50% 5.90% - 6.75% 12 months to 60 months

SBI 2.90% - 5.40% 3.40% - 6.20% 7 days to 10 years

IDFC First Bank 2.75% - 6.00% 2.75% - 6.50% 7 days to 10 years

Axis Bank 2.50% - 5.75% 2.50% - 6.25% 7 days to 10 years

FACTORS THAT AFFECT FD RATES:

Fixed Deposits are an important source of funds for banks which they lend to make profits. Bank FD interest rates vary
by the amount deposited, tenure of deposit, type of depositor as well as the amount of funding required by banks from
FDs. List of factors that determine the interest rates on banks FD are:
• Deposit Amount: Banks offer lower interest rate on bulk deposits of more than ₹ 1 crore and high interest rate on
deposits of less than ₹ 1 crore.
• Deposit Tenure: Banks offer lower rate of interest on deposits with a shorter tenure. Based on current rates, the
highest rate on FDs with a tenure of less than 1 year is 6.80% and highest FD interest rates on the tenure of 10 years
is 7.25%
• Depositor Type: All banks in India offer higher interest on senior citizens FDs. Currently, the interest rate on senior
citizens FDs ranges from 2.50% to 7.30% depending on the deposit amount and deposit tenure.
• Funding Requirement: Large banks like SBI and HDFC Bank which have a wide access to low-cost savings
account typically look to raise lower amounts from FDs and hence offer lower interest rates compared to new banks
and small finance banks which are dependent on term deposits. Hence, small finance banks are relatively new
private sector banks that will always offer higher interest rates on FDs opened with them.
CONCLUSION:

• As per fixed deposit interest rate PNB housing is producing highest interest rate to
both general and senior citizen also. For a period of 1 year.
• But in case of short duration SBI is providing more interest
THANK YOU