Bank deposit interest rates are falling and have come down from levels of 9.25 per cent prevailing about a year back to the current levels of around 8 per cent.

In a few weeks from now the Reserve Bank of India will decide on reducing interest rates further as inflationary conditions in the economy have eased. It's likely that bank deposit interest rates would fall further and could be under 8 per cent.

Ratnakar Bank is likely to go public in the near term. It is a strong bank with decades of experience behind it. As can be seen the interest rate offered is as high as 9.10 per cent. At the moment there are very few banks that can match this and most of them would be ones from the cooperative banks.

One can lock money for a higher period as interest rates could fall further. For example, if you lock money for 5 years, you could not care where interest rates are headed. This is among the best bank deposit with high interest rates.

While Kerala Tranport Development Finance Corporation (KTDFC) may not be bank, we have added the same in the deposits, because it offers the best interest rates among government held institutions. It is owned by the government of Kerala and the deposits are guaranteed by them, which makes it an extremely safe bet.

As can be seen the deposits of KTDFC are by far the best in terms of returns and risks.

IndusInd Bank is a public listed company with a solid track record when it comes to controlling non- performing assets. While the interest rate may not be as high when it comes to the 2-5 year price band, the interest rate of 8.85 per cent for the 2 year 6 months category is the best in the banking space.

Development Credit Bank is a private listed bank. As can be seen from the above chart the interest rate of the bank is not as high as Ratnakar Bank or IndusInd Bank, but, is pretty high when compared to peers from the other private sector and public sector banking space. One can opt for the 60 month period at 8.40 per cent, which looks pretty decent considering where interest rates are headed.

Tamilnad Bank is among the top banks with significant presence in the south. In case you do not have a branch in the area you can always open an account online. Remember, that interest on bank deposits is fully taxable and plan your deposits accordingly.

Conclusion

You can take your own pick from the above considering the accessibility of banks and other advantages that you may have. Remember that bank deposits are virtually risk free.

Look for higher interest rates and remember to lock money for the long term. This is because inflation in the economy is fast falling and the chances of an interest rate cut are very bright. Also, an amount of over Rs 10,000 as interest from a bank deposit will attract TDS of 10 per cent. And, if you do not give PAN card details the TDS would be 20 per cent.

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