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Private Vs Public Vs Small Finance Banks: Interest Rates On Tax Saving FDs Compared
Five-year tax-saving fixed deposits (FDs) have not only guaranteed higher returns and liquidity, but also the ability to plan your tax-saving goals accordingly. You can take advantage of the section 80C tax exemption by investing in these FDs. Section 80C of the Income Tax Act allows for tax deductions on investments up to Rs 1.5 lakh. Premature withdrawals are not permitted from tax-saving FDs, which have a five-year lock-in duration. Despite the fact that bank FD rates have sunk to historically low levels, some banks still pay competitive interest rates. Smaller private banks are now offering tax-saving FDs with interest rates as high as 6.75 percent. RBL Bank pays 6.6 percent interest on five-year tax-saving FDs, while DCB Bank and Yes Bank pay 6.5% and 6.75 percent interest on tax-saving deposits for instance. These rates are higher than those offered by major public sector banks on tax-saving FDs. Leading private sector banks such as Axis Bank, ICICI Bank, and HDFC Bank, on the other hand, pay 5.75 percent, 5.35 percent, and 5.30 percent interest on tax-saving FDs, respectively. Union Bank of India, on the other side, provides the highest rate of 5.55 percent on a 5-year tax-saving FD, led by Canara Bank and State Bank of India (SBI), which pay 5.50 percent and 5.40 percent interest on tax-saving FDs among the leading public-sector banks, respectively. On tax-saving FDs, Bank of Baroda is paying 5.25 percent interest. Here're the top 5 public, private and small finance banks that are currently providing higher interest rates on tax-saving FDs.
Tax Saving FDs of Private Sector Banks
Below are the top 5 private sector banks which are currently providing higher returns on 5-year tax-saving FDs on deposit amount of less than Rs 2 Cr.
| Banks | Regular FD Rates | Senior Citizen FD Rates | W.e.f. |
|---|---|---|---|
| Yes Bank | 6.75% | 7.50% | May 10, 2021 |
| RBL Bank | 6.60% | 7.10% | May 7, 2021 |
| DCB Bank | 6.50% | 7.00% | May 15, 2021 |
| IndusInd Bank | 6.50% | 7.00% | April 26, 2021 |
| City Union Bank | 6.00% | 6.00% | December 16, 2020 |
| Source: Bank Websites |
Tax Saving FDs of Public Sector Banks
Here is a list of top 5 public sector banks which are currently offering higher interest rates on 5-year tax-saving FDs on deposit amount of less than Rs 2 Cr.
| Banks | Regular FD Rates | Senior Citizen FD Rates | W.e.f. |
|---|---|---|---|
| Union Bank | 5.60% | 6.10% | December 15, 2020 |
| Canara Bank | 5.50% | 6.00% | February 8, 2021 |
| State Bank of India | 5.40% | 6.20% | January 8, 2021 |
| Bank of India | 5.30% | 5.80% | January 10, 2020 |
| Bank of Baroda | 5.25% | 6.25% | November 11, 2020 |
| Source: Bank Websites |
Tax Saving FDs of Small Finance Banks
For a deposit amount of less than 2 Cr, here are the top 5 small finance banks giving higher interest on tax-saving FDs.
| Banks | Regular FD Rates | Senior Citizen FD Rates | W.e.f. |
|---|---|---|---|
| Utkarsh Small Finance Bank | 6.75% | 7.25% | October 19, 2020 |
| Equitas Small Finance Bank | 6.65% | 7.15% | 25.01.2021 |
| Suryoday Small Finance Bank | 6.50% | 7.00% | 15.02.2021 |
| AU Small Finance Bank | 6.50% | 7.00% | 1 April, 2021 |
| North East Small Finance Bank | 6.25% | 6.75% | April 19, 2021 |
| Source: Bank Websites |
Note
Customers' deposits in a bank are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) which is a wholly-owned subsidiary of the Reserve Bank of India. All types of banks except company deposits are included under DICGC. In a scheduled bank, the deposits are covered up to Rs. 5 lakh for both principal and interest under DICGC. As a result, investing in a tax-saving FD scheme offered by any of the banks mentioned above will not only help you to earn higher returns but also secure your money.
