Fixed deposit (FDs) accounts of banks and post offices are viable investment options for the risk-averse investors since they offer guaranteed returns. At the same time, depositors also have the option of investing in the tax-saving fixed deposits (FDs) wherein income earned is allowed to be exempted under section 80 (C) of the Income Tax (I-T) Act. Tax-saving FDs, however, keep the capital locked-in for five years, which means that subscribers cannot access their money from these term deposits for a period, which is shorter than five years.
However, the regular fixed deposits offered by banks and post offices allow premature withdrawal facility, but do not enable tax saving.
Given below is a comparison of interest rates offered by State Bank of India (SBI) and India post:
Fixed deposit interest rates of SBI
SBI, the largest lender of the country, revised interest rates on FDs in the month of March. On deposits of less than Rs. 1 crore, SBI offers interest rates ranging from 5.75 per cent to 6.75 per cent on fixed deposits of up to 10 year tenure. Interest rates for senior citizens are marginally higher by 20-50 basis points.
SBI fixed deposit accounts can be maintained with a minimum balance of Rs. 1,000. There is no maximum cap on the amount that can be invested in fixed deposit accounts of SBI.
(All figures in % per annum)
| Tenors | Existing for Public w.e.f. 28.02.2018 | Revised For Public w.e.f. 28.03.2018 | Existing for Senior Citizens w.e.f. 28.02.2018 | Revised for Senior Citizens w.e.f. 28.03.2018 |
| 7 days to 45 days |
5.75
|
5.75
|
6.25
|
6.25
|
| 46 days to 179 days |
6.25
|
6.25
|
6.75
|
6.75
|
| 180 days to 210 days |
6.35
|
6.35
|
6.85
|
6.85
|
| 211 days to less than 1 year |
6.4
|
6.4
|
6.9
|
6.9
|
| 1 year to less than 2 year |
6.4
|
6.4
|
6.9
|
6.9
|
| 2 years to less than 3 years |
6.5
|
6.6
|
7
|
7.1
|
| 3 years to less than 5 years |
6.5
|
6.7
|
7
|
7.2
|
| 5 years and up to 10 years |
6.5
|
6.75
|
7
|
7.25
|
Customers can deposit their money in fixed deposit accounts of India Post, run under the Ministry of Communications. Individual and joint fixed deposit accounts can be opened with India Post via cash or cheque, stated its website, indiapost.gov.in. There is no maximum limit on the maximum amount of fixed deposit. However, the fixed deposit account requires a minimum balance to be kept at least at Rs. 200.
The following are the interest rates on January 1, 2018:
| Period | Rate |
| 1yr.A/c | 6.60% |
| 2yr.A/c | 6.7% |
| 3yr.A/c | 6.90% |
| 5yr.A/c | 7.40% |
One should choose between a timely interest pay out and cumulative option depending on the purpose of making the investment. For instance, investors who look forward to pocketing a regular flow of money can embrace the monthly or quarterly interest pay-out option, while the ones who aim for a consolidated sum at the end of a stipulated term can zero in on the latter option.
