Life after RBI rate cut: Which banks are still offering 8% plus interest rates on FD

Kolkata: Fixed deposits (FD) are the favourite go-to instrument of crores and crores of Indians and people in all sections of the financial pyramid repose their faith in them. The rate of interest banks (and NBFCs) pay on FDs has been on a downhill since RBI's last Repo Rate cut of a jumbo 50 basis points in the first week of June. The transmission of rate cut too seems to have taken place to the satisfaction of the policymakers.

Though the cut in interest rates have been primarily done to boost consumption levels in the country and boost growth rates -- 60% of the GDP if supposed to be constituted by private consumption -- it has also hurt the interest of the depositors. The top banks of the country such as State bank of India, HDFC Bank, ICICI Bank, Punjab natinal Bank, Bank of Baroda, have all brought down the rates of interest.

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However, there are a few banks that are still offering interest rates as high as 8% and above on FDs of various maturity tenures. Significantly, these banks are the small finance banks which always offer a significantly higher rate of interest to attract deposits. The banks that are offering more than 8% interest in FDs are:

Slice Small Finance Bank offers 8.00% to both general customers and senior citizens for tenures 12 months 1 day to 18 months; 8.50% to both age baskets for tenures 18 months 1 day to 18 months 2 days and offers 8.25% to all customers for tenures 18 months 3 days to 36 months.

Suryoday Small Finance Bank offers 8.15% to both general customers and senior citizens for tenure of more than 30 months to 36 months. For a five-year tenure, the rate of interest offered to both categories of customers is 8.40.

Utkarsh Small Finance Bank offers 8.0% to senior citizens on FD with tenure of 371 days to less than 729 days. It also offers 8.00% to general customers and 8.50% to senior citizens on a tenure of 730 days to 1,095 days. The bank also offers 8.25% interest to senior citizens for tenures above 1,461 and 1,826 days.

It is also a matter of fact that the rates of interest can be brought down by these banks at any time since higher interest offered impact the net interest margin of a bank negatively. if retail inflation rates remain at the current rates, analysts think that RBI could settle for a rate cut by 25 basis points n August too.

Therefore, if one invests in these banks, now is the time to lock in higher rate sin the long term. Though it is popularly perceived that small finance banks have a slightly more risk that the top of the line banks, one also as to remember that all these banks are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) which protects investment up to Rs 5 lakh per depositor.