Tax Saving Fixed Deposits or 80C Fixed Deposits or 5 Year Fixed Deposits are one of the most popular avenues for Saving Taxes for the Indian population. I did it when employed in India, my cousins did it, my friends did it and thousands of Indians deposit their hard earned money in these deposits to not only save tax but also to earn a handsome rate of returns. Because of the popularity and demand for this scheme, Banks across India have tried to capitalize on the same to mobilize funds using this deposit scheme. As a result, the rates offered in this scheme are very high (In Most Banks).
The purpose of this article is to list down the banks that are offering the best rate of interest on Tax Saving Fixed Deposits in India.
Before We Begin:
There are Numerous Banks in India. I tried to search the websites of the most prominent banks in the country that have the Deposit Interest Rates listed in their respective websites. If you feel that any bank is missed or any bank is offering a higher interest rate than what is mentioned below, please let me know along with the source to verify the information. I will be glad to edit the page accordingly. The Name of each bank is actually a Hyperlink. If you click on the links, you will reach the bank's website.
Please Note: All the Details below are for Regular Citizen Tax Saving Deposits and the Rates are correct as of 26th February 2013. Some banks offer an extra 0.5% interest for Senior Citizens but that is not covered as part of this article.
The Best Tax Saving Fixed Deposit Rate is: 9.5%
And the Winning Bank is - City Union Bank
Two Banks are Sharing the Second Place with an Interest Rate of 9.25%. They are:
1. Deutsche Bank
2. Tamilnad Mercantile Bank
A total of 6 Banks are offering an Interst Rate of 9% on their Tax Saving Fixed Deposits and Sharing the Third Place. They are:
1. IDBI Bank
2. Indian Overseas Bank
3. Vijaya Bank
4. Bank of Baroda
5. Axis Bank
6. Indian Bank
Some of the Top Banks missing in the Top 3 Places Above and their Rates of Interest are as follows:
State Bank of India - 8.75%
Karur Vysya Bank - 8.75%
ICICI Bank - 8.5%
Punjab National Bank - 8.5%
Kotak Mahindra Bank - 8.5%
HDFC Bank - 8.25%
Citibank - 8%
Why Aren't the Other Top Banks of India in the Top 3 Places??
My list above is purely based on the Interest Rates offered - Period. In fact, the Largest Banks in India like SBI, ICICI, HDFC Bank, Punjab National Bank etc are offering rates less than 9% and as a result, they were unable to come in the top 3 places. At the end of the day, as an investor, I want to select a Bank that is stable and offers the best bang for my buck. The Banking system in India is heavily regulated and stable and hence choosing one of the banks listed above would be an easier choice instead of compromising on Interest Rates and selecting a bigger/larger bank.
Happy Tax Saving!!!
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