Bank fixed deposits are considered to be among the safest investment instruments, in terms of the guaranteed returns that they offer. Returns on fixed deposits are secure because FD interest rates do not change according to volatile market environment. Bank fixed deposits are of two types: 1) with premature withdrawal facility 2) with compulsory lock-in periods. Fixed deposits with a premature withdrawal facility can be closed before the term of the deposit ends. However, banks charge a penalty for the same. Fixed deposits with lock-in periods of five to 10 years cannot be closed before the maturity period. These fixed deposits, however, offer income tax benefits under Section 80C of the Income Tax Act.
On a fixed deposit below Rs 1 crore for a maturity period of one year, SBI or State Bank of India, the country's largest lender, pays interest at the rate of 6.7 per cent, HDFC Bank 7.25 per cent, ICICI Bank 6.75 per cent and Punjab National Bank (PNB) 6.75 per cent.
Given below is a comparison of interest rates paid by SBI, PNB, HDFC Bank and ICICI Bank on fixed deposits up to Rs 1 crore:
State Bank of India (SBI)
SBI pays the following interest rates with effect from July 30, 2018, according to its website - sbi.co.in:
Punjab National Bank (Below Rs. 1 crore)
PNB pays the following interest rates with effect from August 1, 2018, according to its website - pnbindia.in:
HDFC Bank
HDFC Bank pays the following interest rates, according to its website - hdfcbank.com:
ICICI Bank
ICICI Bank pays the following interest rates with effect from August 14, 2018, according to its website - icicibank.com:
Meanwhile, small finance banks usually offer higher FD interest rates than their larger peers.
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