Small finance banks were encouraged in India as a part of the banking inclusion programme. It was to aid the sections of the society that do not have access to banking, including small business units and farmers. These institutions are licensed to operate by the Reserve Bank of India (RBI) to provide basic bank services like accepting deposits and lending.

To stay ahead among the giants in the banking section, these banks offer attractive interest rates on fixed (term) deposits.

Here are 6 such small finance banks with highest interest rates in India. Please note they are not numbered in any particular order as accessibility to the branch and service provided should are also important factors in making a choice.

1. Ujjivan Small Finance Bank

Bangalore based Ujjivan Small Finance Bank accepts three kinds of fixed deposits: Fixed deposits, TASC (trusts, associations, societies, clubs) FD and Tax saver FD (7 percent interest rate).

The highest interest rate is provided on the tenure of 1 to 2 years at 8 percent for deposits less than one crore, effective from May 2017.

Note:

• An additional 0.5 percent will be applicable to senior citizens.
• A regular fixed deposit can be opened through Centre meetings (up to Rs 5,000), branch, mobile banking and net banking.
• Tax saver fixed deposit is only eligible for individuals and HUF.

2. Utkarsh Small Finance Bank

Headquartered in Varanasi, Utkarsh Small Finance Bank provides regular fixed deposit facilities.

Conditions:

The highest interest rates among all the tenures are (for less than Rs 1 crore):

Note:
Monthly interest pay-outs are given at a discounted rate. For tenure below 181 days, interest will be calculated on maturity on the simple interest basis. No interest will be paid on premature withdrawal within 7 days.

3. Fincare Small Finance Bank

Formerly known as Disha Microfin, it received its license for banking services in June 2017 from the RBI. You can open a "smart" fixed deposit account online for an amount less than Rs 1 crore. It provides one of the highest interest rates on Fixed Deposits in India.

Conditions:

4. ESAF Small Finance Bank

Kerala based ESAF Small Finance Bank provides regular FD (with reinvestment and overdraft options) and Tax saver FD (7 percent interest) options. These can be opened without a savings account.

The bank provides highest interest rates on regular FD tenures of:

Conditions:

5. Suryoday Small Finance Bank Ltd.

This Navi Mumbai based small finance bank provides regular FD account as well as tax saver FD (7.75 percent).

Highest interest rates of all tenures are:

Conditions:

Interest calculation:
1. On a quarterly basis for deposits of more than 180 days.
2. Simple interest is paid at maturity for deposits of less than equal to 180 days.
3. Cumulative Interest/ re-investment interest is calculated every quarter and is added to the principal such that Interest is paid on the Interest earned in the previous quarter as well.

The rate applicable on premature withdrawal would be 1% less than the rate applicable from the lower of the two:

• Rate for original /contracted tenure for which the deposit has been booked (as on the date of booking the deposit)
• Rate for the actual tenure for which the deposit was in force with the Bank (as on the date of booking the deposit

6. North East Small Finance Bank

Formerly known as RGVN Microfinance Ltd, it was incorporated into North East Small Finance Bank in July 2016. It only has regular FD provision and you will have to visit the nearest branch to open one. For fixed deposits of less than Rs 1 crore, it provides highest interest rates at: