Banks are offering attractive fixed deposit rates as a result of the Reserve Bank of India raising its repo rate in February. These rates are seen as safer in light of the market’s current volatility. This has led to comparisons with the interest rates offered by small savings programs like Kisan Vikas Patra, which the Centre claims are superior to those offered by bank fixed deposit programs.
The interest rate on Kisan Vikas Patra, one of the Post Office’s popular small savings programs, is updated quarterly by the Union Government. The Centre is offering an interest rate of 7.2% from January to March 2023. This means that any money invested in a KVP account will double in ten years.
Kisan Vikas Patra has a lock-in period of two years and six months. The minimum deposit for a KVP account is Rs 1,000, and there is no maximum investment limit. A KVP account can also be created by children who are over the age of 10.
However, all of the major financial institutions, including State Bank of India (SBI), HDFC Bank, Punjab National Bank (PNB), ICICI Bank, Kotak Mahindra Bank, and Axis Bank, have updated their fixed deposit interest rates. On fixed deposits, nationalized banks provide returns of up to 7.5-8 percent, while small finance banks (SFBs) provide returns of up to 9.5%.
SBI is providing senior citizens with a 10-year rate of 7.5% interest, while PNB is providing a similar rate of 7.3%. HDFC Bank has a special fixed deposit plan called Senior Citizen Care FD, with a 10-year interest rate of 7.75 percent, and ICICI Bank has a senior citizens-only plan called Golden Years FD, with a 10-year interest rate of 7.50 percent.
An investor can earn more than Rs 2.10 lakh by investing Rs 100,000 in SBI for ten years, while an investor can earn Rs 2.14 lakh by investing the same amount in PNB, according to calculations of these schemes’ returns.
For an investment of Rs 1 lakh at a rate of 7.5% for ten years, the Senior Citizen Care FD from HDFC Bank can yield a return of Rs 2.15 lakh, and the Golden Years FD from ICICI Bank can yield a return of Rs 2.1 lakh.
It is essential to keep in mind that although interest on bank FDs is subject to taxation, senior citizens receive additional benefits that assist in reducing their tax burden. Because their returns are not tied to the market, bank fixed deposit schemes have emerged as a safer option for investors.
In the current market, bank fixed deposit schemes offer a safer investment option, despite the advantages of small savings programs like Kisan Vikas Patra. Bank FDs are a popular investment option for investors looking for long-term returns that are stable due to the attractive interest rates that major banks offer to senior citizens.
