There are currently 10 small finance banks doing business in the country and these banks are offering 7-8% interest on RD of different duration.
In the era of job loss and salary cuts, everyone is looking for such investment options where they can get more returns than bank deposits. People can seek more interest on small finance banks (SFB). These banks are offering higher interest rate on RD than government banks or private banks.
Let’s take a look at the interest rates offered by these small finance banks on these RDs.
How much interest are SFB offers?
Utkarsh Small Finance Bank is offering 8% interest rate on RDs of duration ranging from 24 months to 36 months. Another Fincare Small Finance Bank is offering 7.5% interest over a period of 36 to 42 months.
Suryoday Small Finance Bank customers are getting 7.5% interest on RD for a period of 5 years. Jan Small Finance Bank is offering 7.50 percent interest rate on 36 months deposit. Similarly, Ujjivan Small Finance Bank is offering 6.5 percent interest rate on RD of 12 to 24 months.
Equitas Small Finance Bank is paying 7.15% interest on 36 months RD to its customers.
However, IndisInd First Bank, although not a small finance bank, is also offering 7 percent interest rate to customers on deposits ranging from 12 months to 33 months.
Big commercial banks are paying less interest
On the other hand, large commercial banks are offering lower interest rates on RD. HDFC Bank is paying 5.50 percent interest over a period of 90 months. Axis Bank is also offering the same rate of interest on RDs of 5 years to 10 years. On the other hand, State Bank of India (SBI) is offering 5.4 percent interest rate on deposits for 5 years to 10 years.
Punjab National Bank is offering 5.3 percent interest rate for 3 years to 10 years. Bank of Baroda is paying 5.3 percent interest on deposits of the same period.
However, the returns in the post office are slightly higher with 5.4 per cent on deposits of 24 months or above.
What is the tax on RD?
TDS cuts on RD. If the principal is more than Rs 40,000, then TDS is charged at 10 per cent on the interest. But, if the principal is less than Rs 40,000, then there is no tax on it.
There are currently 10 small finance banks operating in the country. These include AU Small Finance Bank, Equitas Small Finance Bank, Suryodaya Small Finance Bank, Ujjivan Small Finance Bank, Utkarsh Small Finance Bank, Jan Small Finance Bank, North East Small Finance Bank and ESAF Small Bank.
RBI has placed SFB in a different category
In the last decade, the Reserve Bank has created a category of small finance banks. Its purpose is to serve small business, small farmers, MSME Industries and units in the unorganized sector.
Four small finance banks are listed on BSE and NSE.
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