Given the relatively high interest rates prevalent in the system, fixed deposits (FDs) have become attractive for investors of all hues. Over the last one year, interest rates on bank and NBFC deposits have risen substantially, and are in the 8-9 per cent range for some tenors.
IDBI Bank has also launched a special deposit scheme called the Amrit Mahotsav for tenures of 375 days and 444 days.
Here’s more on these fixed deposits.
What’s on offer
The Amrit Mahotsav scheme is a special deposit effective from July 14, 2023, and will be available till August 15, 2023. The deposit offers an interest rate of 7.10 per cent per annum for a tenure of 375 days. Senior citizens will get 7.6 per cent interest per annum for the same period. Deposits of a tenure of 444 days are also on offer, with interest of 7.15 per cent per annum for regular deposits, and 7.65 per cent for senior citizens.
These deposits are callable and can be closed prematurely. But a penalty of 1 per cent will be charged on such withdrawals. If the deposit is withdrawn before 7 days, then interest will not be paid.
IDBI Amrit Mahotsav also offers a non-callable deposit option for a tenure of 444 days, which offers 7.25 per cent for general deposits, and 7.75 per cent for senior citizens. Since it is a non-callable deposit, premature withdrawal or closure is not permitted. Premature withdrawal may be permitted in exceptional circumstances, such as in the event of a direction from judiciary /statutory and / or regulatory authorities, or in case of deceased claim settlement.
Our Take
When compared to its peers, the interest rate offered by the Amrit Mahotsav deposit is not very attractive. IndusInd Bank offers regular depositors 7.75 per cent per annum and senior citizens 8.25 per cent for a tenure of 1 to 2 years, IDFC First Bank offers 7.5 per cent to regular depositors and 8 per cent per annum to senior citizens for deposits of 1-2 years’ tenure. Kotak Mahindra Bank also offers 7.2 per cent per annum to regular depositors and 7.7 per cent to senior citizens for the same tenure.
Punjab National Bank offers 7.25 per cent for 444 days in the case of regular deposits and 7.75 per cent for senior citizens. Canara Bank also offers the same rate for a tenure of 444 days. Bank of Baroda offers 7.25 per cent interest to regular depositors, and 7.75 per cent to senior citizens for 399 days in the ’Baroda Tiranga Plus deposit’ scheme.
Small Finance Banks (SFBs) have also been offering higher interest rates than the scheduled commercial banks. Equitas SFB offers 8.5 per cent for 444 days tenure for regular depositors and 9 per cent for senior citizens. AU SFB offers 7.5 per cent to regular depositors and 8 per cent to senior citizens for 1-2 years’ tenure.
Investors can thus skip these IDBI Bank deposits and consider other options mentioned above.
The rates offered under the IDBI Amrit Mahotsav scheme are attractive compared to its own regular deposit rates, but when compared to its peers are not very attractive. Although IDBI Bank may be more systemically sound than SFBs, its peers i.e., other private banks and some public sector banks, offer better rates. Therefore, depositors may look at these other banks to start deposits.