Safest Banks for Fixed Deposits

A fixed deposit is one of the best avenues to secure assured returns with minimal risks. It is a non-market-linked savings option that can offer steady returns. There are numerous issuers to choose from. 

 

One way to choose an issuer is by comparing the FD interest rates offered. The other lies in the rating given to the issuers by the top credit rating agencies, indicating the possibility of default on the rated instrument.

 

The better the rating, the higher the safety. Read on to know about the safest banks and NBFCs for FDs in India. 

The table below lists the CRISIL ratings of some of the top banks that issue fixed deposits in India- 

The table below lists the Non-Banking Financial Companies offering some of the safest fixed deposits in India: 

According to the RBI regulations, deposit insurance is a requirement for all commercial and cooperative banks in India. The Deposit Insurance and Credit Guarantee Corporation Scheme, a subsidiary of RBI, will offer insurance for your deposits. 

 

Under this, you will be insured up to ₹5 Lakhs for both the principal and the interest amount. It is important to note that if you have fixed deposits in multiple banks/NBFCs, the insurance limit will be applicable separately to each deposit.

 

Last year, RBI issued a new guideline regarding the interest on fixed deposits that have matured but are unclaimed. As per the new rule, if the deposit matures and is unclaimed, its interest rate will reduce to the rates for a savings account.

 

This means that if the applicable interest rate is 7% p.a., and you do not claim the maturity amount it will reduce to savings account interest rates appropriate. 

 

Generally, the interest rates on savings accounts are lower than that of fixed deposits. However, if the savings account interest rate is higher, you will continue receiving applicable rates.

Every investor should diversify their holdings to ensure steady growth of their money. When it comes to diversification, you need to have a good mix of high- and low-risk investment instruments. 

 

By doing this, you can leverage the gains of one instrument against the loss of another, if any. This enables you to ensure that your returns and investment amount are secure. Fixed Deposits are a low-risk instrument, offering a strong growth rate with relatively low risks. 

 

They provide a number of characteristics, such as the option to save in multiple FDs at once, a low minimum deposit amount (which starts at ₹10,000), and a simple and straightforward registration process. However, be sure to choose a bank that is safe in India for fixed deposits.

In addition to knowing which is the safest bank or NBFC for fixed deposits in India, there are a few things you need to consider to maximise your returns. Here are a few things you should remember: 

• Assess Investment Goals 

Evaluate your financial goals to know which is the right tenor and issuer. This will ensure that you get the expected returns and are not short-funded when the investment matures. 

• Compare Interest Rates

Interest rates vary across issuers, and such comparison is a crucial step. Generally, corporate FDs have a higher interest rate as compared to bank deposits. Comparing and choosing the best rates will help you maximise your returns and financial growth.

• Optimise Investments

With digitization, there are numerous calculators that give you an estimate of your returns. By getting an estimate before investing, you can tweak your investment amount and tenor to ensure you get the desired returns. 

• Evaluate other features 

Consider other features, such as premature withdrawal, loan against FD, and multiple interest payout options. 

Although you may have found the safest bank or NBFC in India for fixed deposits, it is essential to remember that there are some risks associated with your investment. Understanding these risks is crucial to ensure that you make an informed decision. 

• Risk Pertaining to Liquidity

A fixed deposit is generally thought of as being a financial instrument with high liquidity. However, all deposits do not have a high liquidity rate. For example, tax-saver FDs have a minimum 5-year lock-in period. This prevents you from liquidating them prior to the date of maturity.

• Risk of Default

There have been examples of banks turning default as recorded in recent years for a few cooperative banks which are smaller in size. According to the regulations, you as an investor would be eligible for a compensation of ₹5 Lakhs (principal + interest). 

 

However, if the amount comes to more than that, you run the risk of facing a loss. So, you should always look to save in the safest banks in India for fixed deposits. These are the ones that comply with RBI guidelines and have good ratings.

• Risk of Inflation

Inflation has an impact on all types of savings, even the safest FD in India. For instance, if the interest rate on your FD is below the inflation rate, your returns would not be futile. 

• Risk of High Taxation

Only if you are over 60-years-old, can you take advantage of the tax benefits on your investment as per Section 80 TTB. However, depending on the tax bracket you are in, investors in every other age group will get a different actual rate of return on their FD.

• Risk of Reinvestment

When a fixed deposit matures, the investor has two options: either withdraw the principal or request an extension. If you choose the latter, your FD will be susceptible to the market's current interest rate. This could theoretically impact your savings.

The information provided by BFDL is related to the rates provided by Banks and Deposit taking NBFCs as available from public domain and under no circumstances is intended to be source of advice or recommendation of any financial investment advice or endorsement of any sort. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers and use of such information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. Display of any intellectual property along with the related product information does not imply BFDL’s partnership with the owner of the intellectual property of such products and is solely for the purpose of information, unless otherwise provided by BFDL.