Bank FD: How much will you earn on ₹5 lakh in one year? These banks offer excellent FD returns.

Bank FD: When we have a lump sum amount, we often deposit it in a bank as a Fixed Deposit (FD) to earn a good return. Let’s find out which banks offer the best returns.

Bank FD Rates: When one receives a lump sum amount, the natural thought is to invest it somewhere beneficial. If no other investment option seems suitable, a Fixed Deposit (FD) is often the best choice; it carries minimal risk, keeps the money safe in the bank, and earns interest.

If you prefer investing a significant portion of your savings in an FD, you should first understand the returns you will receive upon maturity based on the applicable interest rates. FD tenures in banks range from 7 days to 10 years. Furthermore, most banks do not set a maximum investment limit, allowing you to invest large amounts.

How much interest will you earn on ₹5 lakh?

If you have ₹5 lakh and wish to keep it secure for a year, a Fixed Deposit is a great option. However, before doing so, it is important to compare interest rates across different banks, as even a slight difference in rates can impact your earnings. Let’s look at the interest rates offered by various banks:

Highest interest rates among public sector banks

Bank of India and Indian Overseas Bank offer the highest annual interest rates for 1-year FDs. Here is a list of interest rates from public sector banks:

Bank of India and Indian Overseas Bank offer an annual interest rate of 6.50%.
Bank of Maharashtra offers an annual interest rate of 6.40%.
Bank of Baroda offers an annual interest rate of 6.25%.
Canara Bank offers an annual interest rate of 6.25%. Punjab National Bank (PNB) is offering an annual interest rate of 6.25%.
State Bank of India (SBI) is offering an annual interest rate of 6.25%.

Interest rates of private banks?

SBM Bank India is offering the highest interest rate at 7.10%.
Bandhan Bank is offering an annual interest rate of 7.00%.
RBL Bank is offering an annual interest rate of 7.00%.
DCB Bank is offering an annual interest rate of 6.90%.
Jammu & Kashmir Bank is offering an annual interest rate of 6.80%.
Tamilnad Mercantile Bank is offering an annual interest rate of 6.80%.
IndusInd Bank is offering an annual interest rate of 6.75%.

Interest rates of Small Finance Banks

If you are considering opening an FD with a small finance bank, the interest rates are even higher there.

Suryoday Small Finance Bank is offering an annual interest rate of 7.25%.
Ujjivan Small Finance Bank is offering an annual interest rate of 7.25%.
Equitas Small Finance Bank is offering an annual interest rate of 7.10%.
Jana Small Finance Bank is offering an annual interest rate of 7.00%.

Things to keep in mind

If you are planning to open an FD, do not base your decision solely on the interest rate. Consider factors such as the bank's credibility, rules regarding premature withdrawal, tax implications, and your own financial needs. By choosing the right bank, you can secure better and safer returns on your investment.