No matter whatever investment options emerge in the market, fixed deposits (FD) in traditional banks are still seen as the most favourable option.

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These deposits are not only considered foolproof due to the reputation of banks but are also expected to aid in wealth growth due to high interest rates.

However, people looking to make substantial gains through fixed deposits in popular banks such as the State Bank of India (SBI) may likely think twice when they are compared with interest rates provided by much smaller players present in the banking sector.

Interest Rates Of Popular Banks

Traditionally, Indians are inclined to go the conservative way when it comes to savings. Thus, on most occasions, people tend to set up an FD account with reputed banks. In addition to the consistent interest rates, the feeling of security coming from an established banking institution influences the Indian investor.

This, in turn, has led to a large volume of fixed deposits in popular banks such as the SBI and other nationalised banks. In return, these banks provide interests that tend to be around the 6 percent mark.

The interest rate for FDs below Rs 1 crore in the SBI range from 5.75 percent for seven days to 45 days, while investors get 6.85 percent for ten-year investment.

In Punjab National Bank, the interest rate for a regular FD account ranges between 5.25 percent and 6.25 percent, with an addition of 0.5 percent for senior citizens.

Comparison With Smaller Banks

But compared to this smaller banking institutions that are usually off the radar of people seem to be providing better returns. For instance, Jana Bank offers an interest ranging from 6 percent to 8.5 percent for regular FDs.

Similarly, AU Small Finance Bank provides an interest ranging from 5.5 percent to 8 percent on FDs below Rs 1 crore.

Thus, it is clear that small finance banks are able to provide substantially higher interest accompanied by same security in comparison with bigger established banks.