As per a report from Kotak Institutional Equities, the cumulative share of current, savings and fixed deposits within Indian household financial assets have dropped from 58 per cent in 2014 to 42 per cent in 2024. This could be correlated with the solid increase in investments in equities, MFs and PMS/AIFs from 12 per cent to 25 per cent during the same period, underlining the fundamental shift where the typical Indian saver is transforming into an investor. And in the midst of this seemingly solid shift, the banks and financial institutions, being the aggrieved parties, have their task cut out to tempt monies chasing ‘easy’ returns, to take a breather in safer and secure banking products.
In this attempt, Jana Small Finance Bank has launched a freshly curated Liquid Plus Fixed Depositscheme to attract your short-term surpluses.
The scheme
Jana SFB has launched the Liquid Plus Fixed Deposit scheme for tenures ranging from a minimum of seven days to a maximum of 180 days. This directly places the scheme as a competitor to liquid mutual funds, savings accounts, current accounts and ultra short-term fixed deposits, trying to lure short-term funds. The scheme offers 6.75 per cent for deposits across tenures. While deposits usually offer an extra 0.5 per cent for senior citizens, this scheme does not do that, as the interest offered is already competitive and amongst the best within the range of tenures covered.
However, the minimum investment amount is relatively higher at ₹10 lakh, thus making it slightly elusive from the average retail investors and tilted towards HNIs and corporates.
The features
The FD enjoys T+0 redemption, meaning same day redemption. But the same option is available only to depositors having a current/savings account with the bank.
The scheme also provides for partial redemption, provided such amount, post the partial redemption is not lower than the minimum investment amount of ₹10 lakh. However, this will result in calculation of interest at applicable rate for the tenure for which the deposit was maintained and not the contracted interest.
Depositors could also avail OD facility against the FD to meet the urgent needs instead of breaking the deposit. The SFB also does not charge any exit load, underlining the flexibility of the scheme.
But the scheme does not provide the comfort of online banking and requires the depositors to visit the bank physically to both open the deposit and withdraw the same.
Our take
With rate cut cycle looming around the corner, this might be the last phase of high interest rates. With talk of equity markets correcting, investors looking to lock-in on some stable interest yields could consider fixed deposits at this juncture.
While the interest rates offered and other attractive features place Liquid Plus Fixed Deposit scheme in the top quartile, the minimum investment amount is quite steep. Regular FD of Jana SFB also offer attractive interest rates for deposits less than ₹3 crore, at 6.5 per cent and 7 per cent, for a tenure of 90 to 180 days, for regular and senior citizens respectively. The next best interest rates offered are by Unity SFB and North East SFB at 6.25 per cent for similar tenures.
SBI and Bank of Baroda offer lower rates along with HDFC Bank and ICICI Bank within the range of 4.5 per cent and 5.6 per cent.
However, Kotak Mahindra Bank offers an impressive 7 per cent for a tenure of 180 days (7.5 per cent for senior citizens). Though, additional features offered by Jana SFB might be a differentiator, KMB provides superior interest rates for the same tenure.
Note that SFBs are also insured with DICGC, putting them at par with private banks, with regard to safety of deposits up to ₹5 lakh.
Investors are advised to take into consideration the financial strength of the banking institutions concerned before opting for their product offerings. Interest should not be the sole deciding criterion.