HDFC Bank Revises FD Interest Rates But Some Banks Pay Up To 9%!

HDFC Bank recently revised its fixed deposit interest rates by as much as 110 basis points (bps). One basis point is equal to one one-hundredth of one percentage point (0.01%). For a period of one year on an FD less than Rs 1 crore, HDFC Bank now pays an interest rate of 6.85 per cent as compared to 6.75 per cent earlier. On fixed deposits of two to five years, interest rates have been hiked from six to seven per cent.  However, on a fixed deposit for tenure of 1 year 1 day - 1 year 3 days, FD interest rates have been reduced by 25 bps.

The largest lender of the country State Bank of India (SBI) pays between 5.75 per cent and 6.75 per cent on fixed deposits of less than Rs 1 crore with maturity up to 10 years. Interest rates on fixed deposits of less than Rs 1 crore with maturity up to 10 years of ICICI Bank range from four to 6.5 per cent.

However, there are some banks which pay higher interest rates that the big these three big lenders of the country. Small finance banks (SFBs) like Fincare Small Finance Bank, ESAF Small Finance Bank, Ujjivan Small Finance Bank and AU Small Finance Bank pay up to 9 per cent interest rates across various maturities for general public on FDs less than Rs 1 crore.

Think of this: on a fixed deposit of less than Rs 1 crore for a period of one year, Fincare Small Finance Bank pays 8 per cent interest rate; ESAF Small Finance Bank pays 8.75 per cent; Ujjivan Small Finance Bank pays 8 per cent interest; AU Small Finance Bank pays 7 per cent; and Suryoday Small Finance Bank pays 8.5 per cent interest.

Why is there such a stark difference between the interest rates of the big lenders and small finance banks?
Small finance banks aim to serve the under-served population of the country. Their goal is to release credit to those who may not otherwise avail of it from the other big lenders.

"Established banks are yet to fully foray deep into the microfinance segment, and their size and scale may not allow them to recognise the needs of the micro segment of the society, which is as ambitious and as much in need of regular banking services. This gap is what the SFBs can easily cater to since SFBs have strong relationships with these customers as most of the transactions are at the client's place," said R Bhaskar Babu, Managing Director and CEO, Suryoday Small Finance Bank.

Small finance banks serve marginalised farmers, small businesses and other micro institutions. The branch network of SFBs is vast, and this can be leveraged to bring in financial inclusion much faster and in a more effective manner, said Mr Babu told NDTV. Small finance banks offer higher returns on savings and deposits than their larger peers.

Given below is a list of interest rates on fixed deposits offered by HDFC, SBI, ICICI Bank and ESAF Small Finance Bank, Suryoday Small Finance Bank, Ujjivan Small Finance Bank, AU Small Finance Bank, and Fincare Small Finance Bank:

Fixed deposit interest rates of HDFC Bank (hdfcbank.com):

The following are the latest interest rates on deposits less than Rs 1 crore: