In recent times, traditional fixed deposits(FD) have often taken a back seat in the world of investments. With the emergence of a plethora of new and enticing options in the financial market, the once-revered fixed deposit seems to have lost some of its luster. However, it’s important to revisit this age-old investment instrument and consider why it still holds value in today’s diversified investment landscape.
In this article, we review the Best Small Finance Bank FD Rates including interest rates, tenure, etc. We’ll all see why it’s lucrative to create fixed deposits with small finance banks compared to traditional banks. Let’s get to the basics first.
Why Fixed Deposits?
- Safety and Stability: Fixed deposits are considered one of the safest investment options in India. They are offered by banks and non-banking financial companies (NBFCs) that are regulated by the Reserve Bank of India (RBI). FDs are insured up to Rs. 5 lakh per depositor per bank under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme, which adds an extra layer of safety.
- Guaranteed Returns: When you invest in an FD, the interest rate is fixed at the time of deposit, and you are assured of the returns you will receive at maturity. This makes FDs a predictable investment option, which is attractive to risk-averse investors.
- Liquidity Options: While FDs are known for their fixed tenures, many banks and NBFCs also offer the option of premature withdrawal or breaking the FD before maturity. However, this may come with a penalty, and the interest rate paid on premature withdrawals could be lower than the promised rate.
- Diversification: FDs can be a useful part of a diversified investment portfolio. They provide stability and can be used to balance higher-risk investments like stocks or mutual funds.
- Tax Benefits: Tax Saver Fixed deposits offer certain tax benefits under Section 80C of the Income Tax Act. Investments made in tax-saving FDs with a lock-in period of five years can be claimed as deductions from your taxable income, up to a specified limit.
- Regular Income Stream: Many retirees and individuals seeking a regular income stream opt for fixed deposits. They can choose periodic interest payouts, such as monthly or quarterly, to supplement their income.
- Accessibility: Fixed deposits are easily accessible and can be opened with a relatively small amount of money, making them accessible to a wide range of investors.
- No Market Risk: Unlike investments in the stock market, FDs do not carry market risk. The interest rate is predetermined, and your returns are not affected by market fluctuations.
Why Fixed Deposits (FD) with Small Finance Banks?
Fixed deposits (FDs) offered by small finance banks in India can be an attractive option for certain individuals compared to regular banks and non-banking financial companies (NBFCs) for several reasons:
Higher Interest Rates: Small finance banks often offer higher interest rates on FDs compared to regular banks. This can be especially beneficial for individuals looking for better returns on their fixed deposits.
Customer-Centric Approach: Small finance banks are new and are on a spree to gain new customers and retain them. They tend to have a customer-centric approach and may offer personalized services to account holders.
DICGC Cover Like Regular Banks: Like all banks in India, small finance banks are regulated by the Reserve Bank of India (RBI). This regulatory oversight provides an additional layer of security and consumer protection.
Potential Downsides of Having Fixed Deposits(FD) with SFBs
Despite the above advantages, there are also some considerations and potential drawbacks to keep in mind when considering FDs with small finance banks:
Limited Network: Small finance banks may have a limited branch and ATM network compared to larger banks, which can affect accessibility and convenience.
Risk: While small finance banks are regulated, they may carry slightly higher risk compared to established banks. It’s essential to assess the financial health and stability of the bank before investing in their FDs.
Services: The range of banking and financial services offered by small finance banks may be more limited compared to larger banks.
Deposit Insurance: The deposit insurance limit for small finance banks is the same as for other banks in India, which is currently set at Rs. 5 lakh per depositor per bank. Be aware of this limit when considering larger deposits.
Ultimately, the choice between a small finance bank, a regular bank, or an NBFC for your fixed deposit should depend on your specific financial goals, risk tolerance, and individual circumstances. It’s essential to carefully compare interest rates, terms, and the reputation of the institution before making a decision. Diversifying your fixed deposits across different banks or financial institutions can also spread risk and enhance the safety of your investments.
List of Small Finance Banks in India
- AU Small Finance Bank Limited
- Capital Small Finance Bank Limited
- Equitas Small Finance Bank Limited
- Suryoday Small Finance Bank Limited
- Ujjivan Small Finance Bank Limited
- Utkarsh Small Finance Bank Limited
- ESAF Small Finance Bank Limited
- Fincare Small Finance Bank Limited
- Jana Small Finance Bank Limited
- North East Small Finance Bank Limited
- Shivalik Small Finance Bank Limited
- Unity Small Finance Bank Limited
Best Small Finance Bank FD Rates
Following are the small finance banks with their highest rate & tenure listed below:
| Bank Name | Tenure with
Highest Interest Rate |
Interest Rate
(General) |
Interest Rate
(Senior Citizens) |
| AU Small Finance Bank Limited | 24 Months 1 Day to 36 Months | 8.00% p.a | 8.50% p.a |
| Capital Small Finance Bank Limited | 12 Months | 7.50% p.a | 8.00% p.a |
| Equitas Small Finance Bank Limited | 444 Days | 8.50% p.a | 9.00% p.a |
| Suryoday Small Finance Bank Limited | Above 2 years to 3 years | 8.60% p.a | 9.10% p.a |
| Ujjivan Small Finance Bank Limited | 12 Months | 8.25% p.a | 8.75% p.a |
| Utkarsh Small Finance Bank Limited | 2 Years up to 3 Years | 8.50% p.a | 9.10% p.a |
| ESAF Small Finance Bank Limited | 2 years to less than 3 years | 8.50% p.a | 9.00% p.a |
| Fincare Small Finance Bank Limited | 750 Days | 8.51% p.a | 9.11% p.a |
| Jana Small Finance Bank Limited | > 2 Years – 3 Years (1095 Days) | 8.50% p.a | 9.00% p.a |
| North East Small Finance Bank Limited | 555 days & 1111 days | 8.50% p.a | 9.25% p.a |
| Shivalik Small Finance Bank Limited | 12 months to 18 months | 8.10% p.a | 8.60% p.a |
| Unity Small Finance Bank Limited | 1001 Days | 9.00% p.a | 9.50% p.a |
Please note that the interest rates mentioned here are as per the provided information and may be subject to change. It’s advisable to verify the current rates on the respective bank’s official websites.
Last Updated: 22 Sept 2023
AU Small Finance Bank Limited FD
Website: https://www.aubank.in/
AU Bank is probably one of the most popular among all small finance banks in India. They are very aggressive in marketing and have a wide range of offerings. Their branch network is also one of the widest among all small finance banks in India
Tenure with High Interest Rate:24 Months 1 Day to 36 Months
Duration: 8% p.a for normal citizens | 8.5% p.a for senior citizens
Capital Small Finance Bank Limited FD
Website: https://www.capitalbank.co.in/
Capital Small Finance Bank (previously Capital Local Area Bank) is India’s first small finance bank established in the year April 2016. They are predominantly present in Punjab, Chandigarh, New Delhi, Rajasthan, Himachal Pradesh, etc.
Tenure with High Interest Rate:12 Months
Duration: 7.5% p.a for normal citizens | 8% p.a for senior citizens
Equitas Small Finance Bank Limited
Website: https://www.equitasbank.com/
This is another popular small finance bank in India thank to its partnerships with various fintech players and branch network. They previously had an offering for fixed deposits in partnership with Google Pay.
Tenure with High Interest Rate:444 Days
Duration: 8.5% p.a for normal citizens | 9% p.a for senior citizens
Suryoday Small Finance Bank Limited
Website: https://www.suryodaybank.com/
Suryodyay Small Finance Bank (previously Suryoday Micro Finance) was established in the year January 2017. They are present in 13+ states and union territories with 556 touchpoints and strong presence in Maharashtra, Tamil Nadu and Orissa.
Tenure with High Interest Rate:Above 2 years to 3 years
Duration: 8.6% p.a for normal citizens | 9.1% p.a for senior citizens
Ujjivan Small Finance Bank Limited
Website: https://www.ujjivansfb.in/
Ujjivan Small Finance Bank Limited is based out of Bangalore & founded in the month of February 2017. They recently got listed on the stock exchanges. They have a wide network of 629 branches spread across 24 States & Union Territories & have plethora of offerings across deposit accounts, loans, etc.
Highest Tenure:12 Months
Duration: 8.25% p.a for normal citizens | 8.75% p.a for senior citizens
Utkarsh Small Finance Bank Limited
Website: https://www.utkarsh.bank/
Utkarsh Small Finance Bank Limited commenced operations from January 2017 & is headquartered in Varanasi, Uttar Pradesh. It provides loans, accounts, deposits among other solutions to its customers.
Tenure with High Interest Rate:2 Years upto 3 Years
Duration: 8.5% p.a for normal citizens | 9.10% p.a for senior citizens
ESAF Small Finance Bank Limited
Website: https://www.esafbank.com/
ESAF is headquartered in Thrissur, Kerala and started operations as an SFB in March 2017. It has around 700 touchpoints spread across 21 states and 2 UTs.
Tenure with High Interest Rate:2 years to less than 3 years
Duration: 8.5% p.a for normal citizens | 9% p.a for senior citizens
Fincare Small Finance Bank Limited
Website: https://www.fincarebank.com/
Fincare has presence is more then 17 states and union territories in India. They commenced operations in July 2023. They have recently brought on-board Viswanathan Anand as the brand ambassador.
Tenure with High Interest Rate:750 Days
Duration: 8.51% p.a for normal citizens | 9.11% p.a for senior citizens
Jana Small Finance Bank Limited
Website: https://www.janabank.com/
Jana Small Finance Bank started operations a bit late in March 2018 & is headquartered at Bangalore. It was established with the mission of promoting financial inclusion by offering a range of products and services, including savings accounts, fixed deposits, small business loans, and microfinance services
Tenure with High Interest Rate:> 2 Years – 3 Years (1095 Days)
Duration: 8.5% p.a for normal citizens | 9% p.a for senior citizens
North East Small Finance Bank Limited
Website: https://nesfb.com/
North East Small Finance Bank Limited, as the name suggests, has a predominantly heavy presence in North Eastern states.
Tenure with High Interest Rate:555 days & 1111 days
Duration: 8.5% p.a for normal citizens | 9.25% p.a for senior citizens
Shivalik Small Finance Bank Limited
Website: https://shivalikbank.com/
Shivalik Small Finance Bank became the first Small Finance Bank in India to transition from an Urban Co-operative bank named Shivalik Mercantile Co-operative Bank.
Tenure with High Interest Rate:12 months to 18 months
Duration: 8.1% p.a for normal citizens | 8.6% p.a for senior citizens
Unity Small Finance Bank Limited
Website: https://theunitybank.com/
Unity Small Finance Bank is promoted by Centrum Group with Bharatpe as a joint investor. Punjab & Maharashtra Co-operative Bank Limited (PMC Bank), which faced a crisis a few months back, was merged with Unity SFB.
Tenure with High Interest Rate:1001 Days
Duration: 9% p.a for normal citizens | 9.5% p.a for senior citizens
Wintwealth FD – Invest in FD directly
Despite having so many banks providing high interest rates people are not investing in such platforms because they do not want to go through the hassle of opening multiple accounts. Wintwealth has come up with a solution to this problem by launching a marketplace for Fixed deposits.
This is a great option for investors looking to create an FD portfolio.
