The tax-saving season is winding to a close as the financial year ends. Many risk-averse investors may consider tax-saving fixed deposits of banks, given the assured returns on offer, and the safety of such investments, especially in volatile markets such as the present one.

In this regard, you can consider the tax saver fixed deposit of Axis Bank for your deductions. Investment up to ₹1.5 lakh under section 80C is available for five-year fixed deposits among many other instruments.

Here’s why Axis Bank’s tax saver deposit may be a good addition to the portfolio of an investor with low risk appetite.

Safe and secure

Given all the news flow from the US and elsewhere about banks going bust, it is important that you choose the safest of options to invest your money.

Axis Bank is among the top private banks in the country. It offers 7 per cent interest on the tax saver fixed deposit. State Bank of India and Punjab National Bank provide 6.5 per cent interest while ICICI Bank and HDFC Bank give 7 per cent.

For perspective, the National Savings Certificate – also an instrument available under section 80C tax deduction –  offers 7 per cent interest.

But the sweetener in the Axis Bank tax saver fixed deposit is reserved for senior citizens. The elderly would get 7.75 per cent interest. This rate is higher than those offered by most large public and private sector banks.

Senior citizens who have exhausted their limit in the SCSS (Senior Citizen Savings Scheme offering 8 per cent interest) can consider the Axis Bank tax saver deposit.

Tax saver deposits can be opened in single or joint names. But only the first holder would be eligible for tax deduction benefits.

Axis Bank offers cumulative as well as regular interest payout options. For those needing regular cashflows, the bank gives the option to take monthly and quarterly interest payments.

Though the inflation and interest rate trajectory is uncertain, especially in light of the recent global events surrounding banks and financial institutions, the general perception is that we may be close to the peak of the interest rate cycle. There may be a pause or a mild hike at best from central bankers, including the RBI.

Therefore, locking into the current interest rates is a good idea for investors.

Robust financials

 As mentioned earlier, Axis Bank is among the top players in the private sector.

  • In the nine months of FY23, the bank’s net interest income increased by 28 per cent over the same period in FY22 to ₹31,204 crore.
  • The return on assets (RoA), a key measure, has soared from 1.12 per cent in 9MFY22 to 1.73 per cent in 9MFY23.
  • Net interest margin was healthy at 4.26 per cent as of December 2022, up 73 basis points year-on-year.
  • Gross NPA (non-performing assets) as of December 2022 was at 2.38 per cent, lower than the 3.17 per cent recorded in December 2021. Net NPA nearly halved from 0.91 per cent to 0.47 per cent over the same period.
  • Total capital adequacy ratio was at a healthy 19.5 per cent as of December 2022.
  • Provision coverage ratio is strong at 81 per cent.

It is apparent that Axis Banks has put behind Covid-19 related troubles and has delivered robust results over the past year or so.

Depositors, especially senior citizens, should find the interest rate reasonably attractive to park their money for tax saving purposes.

If you are an existing customer of the bank, you can open the deposit via internet banking with just a few clicks.

Those who aren’t the bank’s customers may have to visit the branch to open the deposit, with PAN, Aadhaar and address proof for completing the know your customer (KYC) process.

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