4 Highest Interest (Above 9%) Fixed Deposits in India

With increasing competition between the banks and other credit lenders, getting a new client has become difficult and losing a customer is loss making. And one strategy used by the banks, is to offer higher returns through various schemes. And one such scheme is fixed deposit.

Every bank and most of the non-banking finance companies (NBFC) in India offers fixed deposit schemes with varying interest rates. But the average rate offered is between 7%-8%. However there are four entities which are offering highest interest rate as follows:

  1. Ratnakar Bank Limited: Is currently offering interest rate of 9% and above. However the condition is that tenure should be minimum 2 years. And for a FD of 3 years the annualized rate is 9.3% which is much higher compared to other banks. In fact, no other bank in India currently offers this much interest. So instead of earning small return on savings bank account, an individual with sufficient funds can lock their money with RBL and earn good returns, preferably for 3 years.
  2. KTDFC: Kerela Transport Development Finance Corporation Ltd. also offers good interest rate @8.75%. And cumulative annual yield is 10.17% for a tenure of 5 years. So Rs. 10, 000 deposited for 5 years will give a return of Rs. 15, 085. For senior citizens the cumulative yield offered is 10.55%.
  3. Mahindra Finance: FD scheme offered by Mahindra and Mahindra Financial Services Limited (MMFSL) gives a maximum effective yield of 10% for a tenure of 5 years. And for senior citizens, it is 10.35%.
  4. DHFL Swayamsidha Deposit: Diwan Housing Finance Corporation Limited is offering 9.1% interest. However this scheme is only for women customers with a minimum tenure of 1.6 years. And for privileged customers i.e. senior citizens, widows and others as specified by the banks, the rate offered is 9.35%. So a male can transfer money from his account to women and open FD in her name.

So as you can see, NBFCs are offering higher interest rates compared to banks. So someone interested in FD should consider investing in NBFCs and that too for a longer tenure so that maximum benefits can be taken.

Traditionally FD is considered to the best investment option for short term gains. And the most important reasons are:

  1. It offers guaranteed returns, though less compared to high risk, high return investment products.
  2. Returns are offered on compounded interest.
  3. Money is secured. There is no risk involved. Check out other zero risk investment products.
  4. You can take loan against it from the bank, although the interest rate are on higher side by minimum 2%.
  5. Credit card against FD are also offered by few banks.

However like every investment product, it has own cons like:

  • Interest rate is subject to tax.
  • Premature withdrawal results in penalty and the amount varies for each bank.
  • Most importantly, when the market interest rate goes up, interest rate already offered on ongoing FD does not increase.

Documents Required:

Very minimal documents are required for opening a FD account. This includes ID proof (passport, PAN card, election card etc.) and address proof (passport, telephone bill and others). Please contact respective bank for mandatory documents and other terms and conditions.

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