RBI on September 2015 had granted licence to 10 Small Finance Banks. Lately these banks have been in news for offering higher interest rates on their fixed deposits as compared to regular banks. In this post we would tell you whats on offer by small banks and if you should invest and bank with them!
Small Banks Fixed Deposit Interest Rates:
The table below compares the interest rate offered by Small banks to that of SBI. The difference is substantial for mid-tenure deposits.
|Banks||<1 year||1 Year||2 Years||3 Years||4 Years||5 Years||5 Year+|
|AU Small Finance Bank||7.00%||7.63%||7.77%||7.77%||7.50%||7.50%||7.25%|
|Capital Small Finance Bank||6.25%||6.90%||6.90%||6.90%||6.90%||6.80%||6.80%|
|Equitas Small Finance Bank||7.50%||8.00%||7.80%||7.80%||7.00%||7.00%||7.00%|
|ESAF Small Finance Bank||7.50%||8.00%||8.00%||7.75%||7.30%||7.30%||7.30%|
|Fincare Small Finance Bank||7.00%||8.00%||8.50%||9.00%||8.00%||8.00%||7.00%|
|Jana Small Finance Bank||8.25%||8.25%||8.25%||8.25%||8.25%||8.25%||7.00%|
|Suryoday Small Finance Bank||7.75%||8.25%||8.50%||8.50%||8.00%||9.00%||7.25%|
|Ujjivan Small Finance Bank||7.00%||8.00%||8.00%||7.50%||7.00%||7.00%||6.50%|
|Utkarsh Small Finance Bank||7.25%||8.20%||8.50%||8.00%||8.00%||8.35%||7.75%|
Updated: February 8, 2020
Also Read: Highest Interest Rate on Bank Fixed Deposits
Small Banks FD Interest Rates for Senior Citizens:
Additional Interest to Senior Citizens:
- Equitas Small Finance Bank & Jana Small Bank offers additional 0.60% for Senior citizens.
- All other small banks offer additional 0.5% to senior citizens.
|Banks||<1 year||1 Year||2 Years||3 Years||4 Years||5 Years||5 Year+|
|AU Small Finance Bank||7.50%||8.13%||8.27%||8.27%||8.00%||8.00%||7.75%|
|Capital Small Finance Bank||6.75%||7.40%||7.40%||7.40%||7.40%||7.30%||7.30%|
|Equitas Small Finance Bank||8.00%||8.50%||8.30%||8.30%||7.50%||7.50%||7.50%|
|ESAF Small Finance Bank||8.00%||8.50%||8.50%||8.25%||7.80%||7.80%||7.80%|
|Fincare Small Finance Bank||7.50%||8.50%||9.00%||9.50%||8.50%||8.50%||7.50%|
|Jana Small Finance Bank||8.85%||8.85%||8.85%||8.85%||8.85%||8.85%||7.60%|
|Suryoday Small Finance Bank||8.25%||8.75%||9.00%||9.00%||8.50%||9.25%||7.75%|
|Ujjivan Small Finance Bank||7.50%||8.50%||8.50%||8.00%||7.50%||7.50%||7.00%|
|Utkarsh Small Finance Bank||7.75%||8.70%||9.00%||8.50%||8.50%||8.85%||8.25%|
Source: Bank Websites Last Updated: February 8, 2020
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Small Banks Savings Account:
Most regular banks offer 3.5% interest on their savings account. However most small banks are offering interest up to 7.25%. Suryoday Small Finance Bank is offering 6.25% for balance up to Rs 1 Lakh and 7.25% for balance up to Rs 10 Lakh. Below is the list of offering:
|Banks||up to 1 Lakh||1 – 5 Lakh||5 – 10 Lakh||10 Lakh +|
|AU Small Finance Bank||5.00%||6.50%||6.50%||6.75%|
|Capital Small Finance Bank||4.00%||4.00%||4.00%||4.00%|
|Equitas Small Finance Bank||6.00%||6.00%||6.00%||6.50%|
|ESAF Small Finance Bank||4.00%||6.50%||6.50%||7.00%|
|Fincare Small Finance Bank||6.00%||7.00%||7.00%||7.00%|
|Jana Small Finance Bank||6.00%||6.00%||6.00%||6.00%|
|Suryoday Small Finance Bank||6.25%||7.25%||7.25%||7.00%|
|Ujjivan Small Finance Bank||4.00%||4.00%||5.50%||5.50%|
|Utkarsh Small Finance Bank||up to 6% (details not on website)|
Also Read: 21 Hidden Charges in Saving Bank Account
Should you bank with Small Banks?
These are new age banks and some of them are putting technology to good use. Also as they are new, they need deposits to fund and expand their business of lending. To do so they have to offer higher interest rates.
Some people worry about the safety of these banks .i.e. what if these banks close down? I do agree there is possibility that a shut down can happen but that is true for any bank which is operating today. I don’t think people should fear a shut-down as these are closely monitored by RBI. Deposits up to Rs 1 Lakh (including savings, fixed, current and recurring) is insured by Deposit Insurance and Credit Guarantee Corporation (DICGC) as in case of other banks. There are ways you can increase your insured deposit by smart moves.
Also Read: How SWP in Debt Mutual Funds is better than FD for Regular Income?
Less Number of Branches:
The small banks as the name suggests have local presence and they may not be present in your locality. The table below shows the bank headquarters. These banks are mainly concentrated in those geographies.
|Name of the Small Financial bank||Head quarters|
|AU Small Finance Bank Limited(AUBANK)||Jaipur, Rajasthan|
|Capital Small Finance Bank||Jalandar ,Punjab|
|Equitas Small Finance Bank||Chennai, Tamilnadu|
|ESAF Small Finance Bank||Thrissur , Kerala|
|FINCARE Small Finance Bank Limited(formed from Disha Microfin Limited)||Bengaluru , Karnataka|
|Jana Small Finance Bank||Bengaluru , Karnataka|
|North East Small Finance Bank(NESFB)-RGVN Micro Finance Ltd.||Guwahati , Assam|
|Suryoday Small Finance Bank||Navi Mumbai|
|Ujjivan Small Finance Bank||Bengaluru, Karnataka|
|Utkarsh Small Finance Bank||Varanasi , U.P|
In case you want to move to a different place, you may not be able to port your account to the new city as there may be no branches. But today most of banking is done by internet banking and hence may not be a problem for digital savvy customers. However, people who prefer branch banking may be in a fix in case you move too often.
In case you have branch close to you and save money through fixed/recurring deposit, you must invest some part of your savings to these banks which are offering higher interest rates.
11 thoughts on “Get up to 9% in Small Bank FDs (9.5% for Senior Citizens) – February 2020”
Is the new rule of 5 Lac deposit Insurance applicable to these small banks?
If yes we can invest without much worry.
These banks were mostly microfinance institutions previously who will pass on the higher interest rates to poor people. So I would think twice before investing in these banks.
Hello Mr. Amit Kumar
Equitas Small Finance Bank interest rate is not matching, I checked online on website.
Ujjivan Small Finance is a revolution in today’s banking with practically zero balance account, 9% interest on Fixed Deposit with zero penalty after 6 months and Mobile banking which is rated highest among all banks.
Contact Nitin Goyal
Good update Amit. One of the biggest problem with these small finance banks is their location of operation. Since they operate in limited locations, all investors cannot take advantage of such high FD rates. Once they start operating from major locations, such small banks gains importance
Hi Mr Amit
I’m a NRI, will plan to invest NRE FD Rs1000000 ESAF small finance bank without saving account how this bank is it safe? my home town don’t have any branches in ESAF bank is it ok for do only online communication? Please help to answer
Thank you have a good day
Hi, Mr. Guru. i am Am At ESAF SFB please contact me for clarification 7066819593
Is there a plan for RBI to float dollar bond for NRI?
I have No idea
people who prefer branch banking may go with yes bank…because ,”EVERY BRANCH IS HOME BRANCH” is their policy and also offers good int. on deposites
Useless propaganda about Yesbank. Their interest rate is very low and like other Govt Banks.