Safest Banks for Fixed Deposit in India 2024

The way to choose a bank or NBFC for investing in fixed deposits is to assess the ratings assigned by the top credit rating agencies. These ratings indicate the possibility of default on the rated instrument. 

The better the rating, the higher the safety of capital you have invested in a fixed deposit. The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures deposits of up to ₹5 Lakhs per deposit held in a notified bank.

CRISIL is an independent credit assessment agency that assigns ratings to financial institutions on their likelihood of paying debt obligations. The table below lists different banks’ credit ratings from some top rating agencies for fixed deposit investment:

Disclaimer: The interest rates and ratings shown here are subject to change, so please check before investing. These rates are updated as of September 30, 2024. The asterisk (*) in the table above indicates Bajaj Markets partners.

Non-Banking Financial Companies (NBFCs) provide safe FDs in India. The table below lists the NBFCs offering some of the safest fixed deposits in India: 

Disclaimer: Please note that the NBFCs mentioned above are listed in no particular order. The credit ratings and interest rates are provided as of September 30, 2024. The asterisk (*) in the table above indicates Bajaj Markets partners.

According to the RBI regulations, deposit insurance is a requirement for all commercial and cooperative banks in India. The DICGC scheme, a subsidiary of RBI, offers insurance cover for your deposits. 

 

Under this, your deposit will be insured up to ₹5 Lakhs for both the principal and the interest amount. It is important to note that if you have fixed deposits in multiple banks, each of your deposit will be covered separately.

 

Consider that you have invested in an FD of ₹7 Lakhs, you will only receive the insured sum of ₹5 Lakhs in case of the bank’s insolvency. However, if you have earned an interest of ₹40,000 on an FD of ₹3 Lakhs, you will receive ₹3.40 Lakhs under this scheme.

Fixed Deposits offer growth with relatively low risks. They are a good way to diversify your holdings, especially if you are invested in high-risk investment instruments. 

 

By doing this, you can leverage the gains of one instrument against the loss of another, if any. This enables you to ensure that your returns and investment amount are as secured as possible. 

 

FDs also give the option of laddering, where you can invest in multiple FDs at once that mature at different times. They also require a low minimum deposit amount (which varies depending on the financial institution's policies), and have a simple and straightforward registration process. 

All you need to do is be sure to choose a bank/NBFC that is safe.

In addition to deciding on an institution for investing in fixed deposits in India, there are a few things you need to consider to find some of the best banks for fixed deposits and maximise your returns. 

• Assess Investment Goals 

Evaluate your financial goals to know which is the right tenure and financial company. This will ensure that you get the expected returns and are not short-funded when the investment matures. 

• Compare Interest Rates

Interest rates vary across banks/NBFCs, and comparison is a crucial step. Generally, corporate FDs have a higher interest rate as compared to bank deposits. Comparing and choosing the best rates will help you maximise your returns and financial growth.

• Optimise Investments

With digitisation, there are numerous calculators that give you an estimate of your returns. By getting an estimate before investing, you can tweak your investment amount and ensure you get the desired returns. 

• Evaluate other features 

Consider features, such as premature withdrawal, loan against FD, and multiple interest payout options. 

It is essential to remember that there are some risks associated with your investment when selecting an appropriate bank or NBFC. When comparing some of the best fixed deposits in India, consider the following risk factors: 

• Liquidity

A fixed deposit is generally thought of as being a financial instrument with high liquidity. However, all deposits do not have a high liquidity rate. For example, tax-saver FDs have a minimum 5-year lock-in period. This prevents you from liquidating them prior to the date of maturity.

• Default

There have been examples of bank defaults, as recorded in recent years for a few cooperative banks, which are smaller in size. According to the regulations, you as an investor would be eligible for a compensation of ₹5 Lakhs (principal + interest). 

 

However, if the amount comes to more than that, you run the risk of facing a loss. So, you should always look to save in the safest banks in India for fixed deposits. These are the ones that comply with RBI guidelines and have good ratings.

• Inflation

Inflation has an impact on all types of savings, even the safest FD in India. For instance, if the interest rate on your FD is below the inflation rate, your returns can be considered futile. 

• Taxation on Interest

Ultimately, you will only take home as interest what remains post-taxation. Your actual rate of return will depend on the tax bracket you are in, with higher tax liabilities attracting higher slab rates.

• Risk of Reinvestment

When a fixed deposit matures, you have two options: either withdraw the principal or request an extension. If you choose the latter, your FD will be susceptible to the market's current interest rate. This could theoretically impact your savings.

The information provided by BFDL is related to the rates provided by Banks and Deposit taking NBFCs as available from public domain and under no circumstances is intended to be source of advice or recommendation of any financial investment advice or endorsement of any sort. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers and use of such information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. Display of any intellectual property along with the related product information does not imply BFDL’s partnership with the owner of the intellectual property of such products and is solely for the purpose of information, unless otherwise provided by BFDL.