India Deposit Rates

About Financial Investment

Presently, the different banks as well as the post office branches offer an individual with ample opportunity to invest his or her money. The varied kinds of investment options include fixed deposits, saving schemes, postal scheme, government bonds and many more. Most of these schemes even get an individual, a significant return on the invested capital. Following are some of the popular investment schemes:

Fixed Deposits: A Fixed Deposit, in the terminology of deposits, is defined to be a savings account where an investor gets a fixed interest rate on a given amount of money. This is even referred to as a Term Deposit or a Certificate of Deposit, since, one is being provided with a certificate as a proof of his or her investment. The money invested in such a scheme can not be withdrawn prior to the maturity date of the scheme. If done so, penalty might get levied on the investor.

Fixed Deposits can be done both on nationalized and private banks as well as post offices. The rate of interest varies from one place to another though. The interest rate even varies on the duration of maturity as well. A fixed deposit rate can be as high as 9.5 % or even more in case of some private banks. Senior citizens are even provided with a high rate of interest than the ones provided to a person who is not a senior citizen of India. Let us have a quick look at some of the fixed deposit rates offered by the different banks from the table mentioned below:

Sl. No.Name of Bank1 year to 2 years2 years to 3 years3 years to 5 years
1Allahabad Bank9.00%9.00%8.75%
2Bank of Baroda9.00%9.00%8.50%
3Canara Bank9.50%9.25%9.00%
4Dena Bank9.60%9.25%9.25%
5Indian Bank9.25%9.25%9.00%
6Axis Bank9.25%8.50%8.50%
7HDFC Bank9.00%9.25%8.25%
8IndusInd Bank9.00%8.75%8.75%
10HSBC Bank9.00%8.10%7.50%

Government Bonds: A government bond, issued by the government of a country, is generally denominated in the currency of the respective nation. Such a bond is said to be a risk-free bond since taxes can be redeemed by the country's government on the maturity of the amount. In between the period of 1998 and 2011, the 10 Years' Government Bond Yield averaged 7.92 %. However, the latest rate of interest reported in the nation was 7.5 %. A Government Bond can have tenure of some days to even more than 30 years. Based on that, they are even called long term bonds (2 years to 30 years) or short term bonds (91 days to 364 days). Usually issued by a bank, the investors receive semi-annual or annual interest. The Government of India usually issues such a bond on a minimum investment of INR. 10, 000. Government Bonds can be of the following types:
  • Bonds with put or call options
  • Capital Indexed Bonds
  • Fixed Rate Bonds
  • Floating Rate Bonds
  • Zero Coupon Bonds
Postal Scheme India Post provides a citizen of the country with many postal schemes, which not just helps one save his or her money but even help them in their tax saving if required. The interest of such schemes vary from 4 % to 9 % or even more depending upon the nature, amount as well as duration of the scheme. The following table provides detailed information about some of the well known deposit schemes offered by India Post:

Sl. No.Name of SchemeInvestment LimitsRates of Interest and DurationSalient Features
1Post Office Savings AccountMinimum INR. 50/-4.0 % per year on joint as well as individual accountsTax free interest and cheque facility
2Post Office Time Deposit AccountMinimum INR. 200/- and later in multiples of this amount with no upper limitInterest calculated quarterly but payable annually For 1 year: 7.70 % For 2 years: 7.80 % For 3 years: 8.00 % For 5 years: 8.30 %With an option of being opened by a person, this scheme helps in tax saving under Income Tax Act Section 80 C in India
35 Year Post Office Recurring Deposit AccountMinimum INR. 10/- in every month or an amount leading to multiples of INR. 5/- without any maximum limitINR. 10/- account after maturity fetches INR. 738.62/- and can be re-invested again for another 5 years on yearly basis Post 1 year, even 50 % of the total balance can be withdrawn. Advance deposits of 6 months and 12 months earn rebate.
4Post Office Monthly Income Account SchemeAmount needs to be multiples of INR. 1, 500/- and joint account holders can make a maximum deposit of INR. 9 lakhs whereas, for single account holders, the maximum limit is INR. 4.5 lakhs8.2 % per year (W. e. f. 01.12.2011) Maturity period: 5 years Premature encashment can be done post completion of 1 year with applicable conditions. M. I. S. accounts started on or after 1st December, 2011 do not qualify for bonus.
5National Savings Certificate (VIII issue)Minimum INR. 100/- and in multiples without any upper limitPost 5 years, INR. 100/- increases to INR. 150.90/-Deposits as well as interest qualify for tax saving as covered by the Section 80 C of the Indian I. T. Act. Can be bought by an individual or for a minor or on behalf of minors.
615 Year Public Provident Fund AccountMaximum INR. 1, 00, 000/- and minimum INR. 500/- in a business year with the facility of making deposits in 12 months or in lump sum8.6 % per year (W. e. f. 01.12.2011)Post 3rd financial year, loan facility is available and after the 7th financial year, withdrawal can be made on a yearly basis. This scheme along with its interest is tax free as per the Indian I. T. Act's Section 80 C.
7Senior Citizen Savings SchemeA single deposit in multiple of INR. 1, 000/- without exceeding INR. 15 lakhs 9 % per year payable from deposit's date on 31st March or 30th September or 31st December and interest will be payable on each quarter end of a year An individual can operate multiple accounts or joint account with spouse. After 1 year, premature closure can be done on a deduction of 1.5 % of interest and if done so after 2 years, interest deduction will be 1 %. T. D. S. gets deducted from the interest at source in case the amount of interest exceeds INR. 10, 000/- p. a. Tax benefit, according to the Section 80 C of the I. T. Act of India, is even available with this scheme.

Private Banks' Rates

The rate of interest, offered by the private banks in India in case of both saving deposits as well as loans, varies from that of the nationalized or the public sector banks or post offices. Apart from varying from one private sector bank to another, the interest varies from the nature of the deposit or loan as well. However, every bank maintains a base rate as fixed by R. B. I. (Reserve Bank of India), below which they are not allowed to grant loans or offer saving deposits.

Loan Rates in Private Banks: The latest base loan rates, which were being followed by some of the private banks in the country since the month of August, 2011 are given in the below mentioned table:

Sl. No.Name of BankBase Rate
1Axis Bank10.00%
2HDFC Bank10.00%
3ICICI Bank10.00%

Savings Rates in Private Banks: Around the starting of November, 2011, some private sector banks increased their interest rate of savings deposits. Based on 6 % points, YES Bank, one of the private banks raised its rate of saving deposits by 200. A number of banks like Kotak Mahindra Bank or Ratnakar Bank of Kolhapur has fixed their rate of savings deposit at 5.5 %. Among them Kotak Mahindra Bank offers this interest rate for saving deposits amounting below INR. 100, 000/- and 6 % above this amount. However, the interest rate varies from one bank to another.

Last Updated on 12/29/2011