Exploring High-Interest Fixed Deposit Opportunities

In the wake of the Reserve Bank of India's (RBI) decision to cut the repo rate by 25 basis points in February 2025, fixed deposit investors are on the lookout for the most lucrative FD schemes. Small Finance Banks (SFBs), a unique category established by the RBI to enhance financial inclusivity, are now offering interest rates as high as 9% for specific durations. These banks cater primarily to micro and small industries, small-scale farmers, modest business enterprises, and individuals in the unorganised sector, providing them with essential banking services.

Top Small Finance Banks and Their FD Rates

Unity Small Finance Bank stands out with the highest interest rate of 9% per annum for deposits with a 1001-day tenure. NorthEast Small Finance Bank matches this rate for deposits between 18 months 1 day to 36 months. Suryoday Small Finance Bank offers 8.6% per annum on 5-year deposits, while Utkarsh Small Finance Bank presents an 8.5% per annum rate for deposits ranging from 2 to 3 years. ESAF Small Finance Bank, Equitas Small Finance Bank, Jana Small Finance Bank, Ujjivan Small Finance Bank, and AU Small Finance Bank also provide competitive rates, with the highest being 8.25% per annum.

FD Safety and Investment Tips

Deposits in small finance banks are safeguarded by DICGC insurance up to Rs 5 lakh. However, financial advisors recommend caution and suggest limiting investments within the DICGC insurance coverage to ensure the safety of the principal amount and accrued interest. This approach is crucial for mitigating risks associated with the distinct operational models of SFBs compared to conventional banks.