Term deposit interest rates for senior citizens climbing up

CHENNAI: With credit disbursals picking up and the Reserve Bank of India (RBI) increasing its lending rates to the banks (repo rate) banks and others are now offering higher interest rates on fixed deposits.

In the case of senior citizens, the fixed deposit rates touch 8 per cent in certain cases.

During the Covid-19 period, the interest on fixed deposits were in the 5% band and one year deposit and now it has climbed up to 7 per cent band.

The State Bank of India (SBI) offers 7.25 per cent for senior citizens on fixed deposits for a period 1 year to less than 2 years and also for 5-10 years tenure.

The interest rates go down to 6.75 per cent for senior citizens on fixed deposits for three years to less than five years.

On its part, the HDFC Bank offers senior citizesn 7% on deposits for 1 year to 15 months and 7.75 per cent on term deposits for five years one day to 10 years.

"I am planning to foreclose my existing deposit and go for a new deposits provided it works out beneficial," said Nitya V, a housewife.

If a fixed deposit is broken prematurely, then the banks will offer the interest rate applicable for the actual term.

The government has revised upwards the interest rates on Senior Citizen Savings Scheme (SCSS) to 8 per cent for the fourth quarter of FY23. The SCSS interest rate is reviewed quarterly and is subject to periodic change. Interest is also calculated and credited quarterly.

Similarly non-banking finance companies (NBFC) and housing finance companies have also increased their interest rates on term deposits.