2 Govt Banks To Offer 7% On Non-Senior Citizen Deposits

The Reserve Bank of India (RBI) has kept raising repo rates gradually since May 2022, which led to a 1.90% repo rate hike in 2022. In September, RBI hiked the repo rate by 50 bps which encouraged various banks and other financial institutions to hike their interest rates on various products such as Fixed Deposits (FD). Since FD are chosen by investors as a safe and guaranteed return, lenders provide better returns to customers.

In October, post 4th consecutive repo rate hike, two government banks, Union Bank Of India & Canara Bank also increased their FD rates. With the increased FD rates, the bank offers up to 7% interest.

Union Bank Of India

Union Bank Of India, a leading PSU bank has hiked interest rates on FD following the recent repo rate hike BY RBI. According to the Bank's official website, the bank has revised the interest rates on FDs below 2 Crore with effect from 17 October 2022.

 The interest rates on retail FDs with maturities ranging from 7 days to 10 years have increased by the bank. Following the increase in FD rates, the bank now provides interest rates for the given tenor that range from 3% to 7%. According to the available information on the bank's website, the interest is calculated on a daily basis and is credited on a quarterly basis every year in the months of April, July, October and January. 

Fixed Deposits interest rates below 2 Crore w.e.f. 17.10.2022 

Period	Interest Rate (% P.A.)
7-14 Days	3
15 -30 Days	3
31-45 Days	3
46 -90 Days	4.05
91-120 Days	4.3
121-180 Days	4.4
181 Days to <1 Year	5.25
1 Year	6.3
> 1 Year to 443 Days	6.6
444 Days	6.7
445 days to 598 days	6.6
599 Days	7
600 Days to 2 Years	6.6
> 2 Year to 3 years	6.7
>3 Year to 5 Years	6.7
>5 Years to 10 Years	6.7

Source - unionbankofindia.co.in

Canara Bank

Canara Bank, another PSU bank, recently raised the interest rate on fixed deposits under Rs. 2 crore following the 0.50% repo rate hike in September. The bank's official website states that the increased FD interest rate is effective from October 7, 2022. 

The Bank now offers interest rates on deposits with maturities ranging from seven days to ten years with interest rates starting from 3.25% to 7% percent for the general public. The bank also offers additional interest on senior citizens' deposits. According to the bank's official website, Additional interest of 0.50% for Senior Citizens is available for Deposits (Other than NRO/NRE and CGA Deposits) less than Rs. 2 Crore and with tenor of 180 Days and above. 

Interest rates On Domestic Fixed Deposits Below 2 Crore w.e.f 07.10.2022

Period	Rate of Interest (% p.a.)
7 days to 45 days*	3.25
46 days to 90 days	4.25
91 days to 179 days	4.5
180 days to 269 days	5.9
270 days to less than 1 Year	6
1 year only	6.5
Above 1 year to less than 2 years	6.5
666 Days	7
2 years & above to less than 3 years	6.5
3 years & above to less than 5 years	6.5
5 years & above to 10 Years	7

 
Source- Canarabank.com

Why are high FD rates good to grow corpus?

The return on savings and the total amount of money you receive at maturity can both be significantly impacted by the interest rates on fixed deposit accounts. FD rates are also very valuable to investors as they give them the freedom to choose their investment amount and tenure in accordance with fluctuating interest rates.

An FD will produce satisfactory returns, but a fixed deposit with a higher interest rate will produce profitable returns. Government banks that offer FD interest rates of more than 7% annually are difficult to find. However, with Canara Bank & Union Bank of India FDs rates up to 7% on non-senior citizen deposits FDs seem promising. When you choose FD with a higher interest rate, you can help grow your money without doing anything.