savings account interest rate: these banks offer interest rates over 6% on these types of savings accounts

Much like term deposit (FD) investors, customers of savings accounts have complained about low and low interest rates on savings. Over the past two years, banks have reduced interest rates on savings accounts. More recently, for example, the Punjab National Bank (PNB) recently lowered interest rates on national savings accounts and NRIs. According to the PNB website, the interest rate on savings accounts with balances below Rs 10 lakh has been reduced to 2.8% per annum. Other big banks also offer similar interest rates on their savings accounts. At a time like this, it should be noted that few small financial banks are offering higher interest rates on savings accounts with balances above Rs 1 lakh. The interest rates applicable on this savings account will be on the incremental balances that are present and correspond to the specified slab amount.

For example, Ujjivan Small Finance Bank, according to its website, offers an interest rate of 7% on savings accounts with balances above Rs 1 lakh and up to Rs 25 lakh. According to the bank, “If a customer keeps 120,000 Rs./- in the savings account, 4.00% interest will be earned for 100,000 Rs./- and 7.00% interest will be earned for them. 20,000 Rs. Remaining. ”

Jana Bank states that for savings accounts with balances above Rs 1 lakh and up to Rs 10 lakh, the interest rate earned will be 6%, “6.00% will be paid on additional balances at- above Rs. 1 Lac and up to Rs. 10 Lacs. ”

Here is an overview of the interest rates offered by small banks for funding their savings accounts.

AU Small Finance Bank

Small Ujjivan Financial Bank

Small Equitas Financial Bank

Fincare Small Financial Bank

Suryodaya Small Finance Bank

Utkarsh Small Financial Bank

Interest rates on large bank savings accounts

A State Bank of India savings account now earns 2.7% per annum (effective May 31, 2020). An ICICI Bank savings account with a balance of less than Rs 50 lakh earns 3% per year (as of June 4, 2020). A Kotak Mahindra Bank savings account (a bank whose USP has been its high interest rates on savings accounts, earning 6% at one point) with a balance of up to Rs 1 lakh is now earning 3.5% per year. For balances above Rs 1 lakh, Kotak Mahindra Bank offers 4%. The Punjab National Bank recently announced a rate cut on its savings accounts.

The post office savings account currently offers 4% per annum.

Are Small Financial Banks Safe?

When a bank goes bankrupt, the only respite a depositor has is the insurance coverage offered by the DICGC. This coverage has been increased to Rs 5 lakh from Rs 1 lakh, effective February 4, 2020.

Small financial banks are directly regulated by the Reserve Bank of India (RBI), as are other large banks. This means that if a small bank goes bankrupt, deposits held by customers will amount to up to Rs 5 lakh by the DICGC deposit insurance scheme.

The insurance coverage offered by the DICGC works on deposits such as savings accounts, term deposits (FD), current accounts, recurring deposits (RD), etc.

In accordance with the directives of the DICGC, each depositor in a bank is insured up to a maximum of Rs 5 lakh for the amounts in principal and interest which he holds in the same way and in the same way as on the date of liquidation / bank cancellation. license or the effective date of the merger / merge / rebuild scheme.

This means that all of your accounts held in the same right and capacity, whether it is a savings account or a checking account, FD or RD, will be clubbed and you will only get full insurance coverage of Rs 5 lakh . This amount includes both the principal and the amount of accrued interest.