Small finance banks offer higher 5-year FD rates than SBI and HDFC Bank, Suryoday tops at 8.50%

Many people still hesitate to invest in the stock market, given its condition, and are not comfortable taking risks. Many therefore turn to fixed deposits (FDs), trusting that a bank FD is a safe investment with guaranteed returns. The trouble is that, while choosing, people look at only a handful of banks.

Most people put their money in banks such as SBI and HDFC. But some small finance banks have emerged as good options for FDs, offering higher interest rates than these banks.

Suryoday Small Finance Bank pays the highest interest on five-year FDs. It offers senior citizens up to 8.50% on a five-year FD.

Here are the rates of various small finance banks for a five-year FD. Suryoday Small Finance Bank offers 8.50%. Jana Small Finance Bank pays 8.00%. Ujjivan Small Finance Bank offers 7.70%. Equitas Small Finance Bank and Utkarsh Small Finance Bank both pay 7.50%. AU Small Finance Bank and Slice Small Finance Bank offer 7.25%.

After Suryoday, Jana Small Finance Bank comes next, paying 8% on a five-year FD. Ujjivan Small Finance Bank pays 7.70%.

Senior citizens generally get higher interest on FDs than other customers. Investors aged 60 and above can avail of this. Suryoday Small Finance Bank's rate for senior citizens is 8.50%. This means that if a senior citizen wants to invest in a long-term FD, the rates of small finance banks can be attractive.

Consider a deposit of Rs 5 lakh. Suppose an investor puts Rs 5 lakh in a five-year term deposit and earns 8.50% interest a year. After five years, the Rs 5 lakh will grow to Rs 761,397. That means interest of Rs 261,397 over the five years.