With the interest rates offered by Indian banks on fixed deposits crossing the double digit mark, I wanted to park a part of my savings in Fixed deposits. With Inflation in India falling and staying below the 6% mark, I feel there is not much scope for further hardening of interest rates. Hence I decided this is the right time to open a fixed deposit which is absolutely risk free (upto 1 lakh) since it is covered by DICGC. I wasn’t able to find a single source for getting the interest rates offered by various banks at a single place. After spending 2-3 hours researching on google and calling up banks for information, I found that ABN Amro is presently offering the highest interest rate for fixed deposits. They are offering 10.25% for a 188 day term deposit.
What suprised me was that many banks where offering an interest rate of just around 8.5% for the same fixed deposit. Since there is not much of a differentiation possible when it comes to fixed deposits with different banks, I started wondering who would open a fixed deposit with banks offering about 8.5% interest, when there is a player offering the same product/service, with not much tangible differentiation and is paying 10.25% interest, which is about 2% higher. It couldn’t be because they had no ABN Amro branch near their residence, because these people send their marketing agents to your house to fill up the forms and complete all the required formalities. The only reason I could think of was information barrier. Information is not reaching the people. Or can it be that people are so lazy that they wont even spend an hour researching about the interest rates offered by other banks, before they select a bank? I wonder!
For some strange reason, I just remembered the old adage, “KNOWLEDGE IS POWER and INFORMATION IS WEALTH”
I request readers to share their knowledge on fixed deposit interest rates offered by various banks and also about FMP yield through comments.