Small Banks, Big Benefits

Small banks offer interest rates higher than their larger pers, but depositors should also look at the flip side. Preeti Kulkarni and Suyash Desai tell you more

- Suyash Desai

Savers looking for higher returns on bank deposits can now look at small banks as an option. Bank fixed deposit rates have shrunk to 6-6.75 per cent, depending on the tenure, leaving a large section of Indian investors – particularly senior citizens – distressed. “They have the option of investing in mutual funds and earning dividends, which may make up for the loss of interest on bank deposits. But a majority of them still feel comfortable with banks,” says independent financial counsellor VN Kulkarni.

While the interest rate cycle now seems to be turning around, with some banks such as SBI and Axis Bank hiking interest rates, depositors continue to look for more lucrative fixed return options.

When small is big