Why small finance banks are good for investment, Small finance banks, fixed deposit interest rate, savings account interest, zero balance account in small finance banks
Small finance banks are the niche banks to provide financial services to individuals or entities, like unorganized sector entities, micro and small industries, small farmers and small business units, not being served by other reputed banks.
Investing in small finance banks offers numerous benefits like higher savings account interest rates, higher fixed deposits (FD), savings account interest rates, zero balances, and many more.
Fixed deposit interest rate
If you have more than ₹10 lacs in your savings account or fixed deposit then you should shift the money to small finance banks. The interest rate on fixed deposits in small finance banks can offer 6.9% per annum for 2 years, whereas in other banks, the fixed deposit interest rate can be a maximum of 5.9% per annum.
An FD of 10 lacs in small finance banks will give you an interest rate of ₹10,000 more than the other banks. Similarly, an FD of ₹20 lacs will give ₹20,000 more interest per year.
Savings account interest rate
Even if you keep the amount in a savings account then also you get a higher interest rate of up to 7% per annum. For more details, you can check the link of a small finance bank.
Some of the small finance banks offer you the facility to have zero balance in your savings account if you have a fixed deposit of more than ₹1 lakh. There is no such facility in other banks except for salaried accounts, Jan Dhan accounts, etc.
How to keep your money safe?
You must be aware that the money kept in the bank can have numerous risks, for example, bankruptcy, theft, etc. RBI has ensured that the money of each depositor is insured to a maximum of ₹5 lakhs for both principal and interest amounts. For more details, you can check the link.
So if you have ₹10 lakhs, then you should divide the amount equally in 2 or more small finance banks.
Frequently asked questions
How much should I invest or save in small finance banks?
Maximum of ₹5 lahks in a savings account or fixed deposit including interest amount.
List a few of the small finance banks.
AU Small Finance Bank, Jana Small Finance Bank, Equitas Bank, Ujjivan Small Finance Bank
Can I have zero balance in my savings account?
Yes, you can also check the bank’s policies
Disclaimer: This article is for knowledge only. You have to do your own research before making a final investment decision.
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