In the wake of deregulation of interest rates on savings bank deposits by the Reserve Bank of India, many banks have announced upward revision in interest rates on savings deposits.
Some banks have, however, taken to a novel way of rewarding their depositors. They have come out with a new term `unfixed deposits' to do this. Customers who are opting for such an `unfixed deposit' scheme will get higher returns. Not just that. They will also get full liquidity on their deposits. Unlike the conventional fixed deposits, ‘unfixed deposits' allow depositors to withdraw money any time without prior notice and without losing out on interest.
Karur Vysya Bank (KVB) has come out with a product Flexi term deposit, a high return short-term flexible deposit. The interest rate offered by the bank is nine per cent per annum. According to Sankaravadivel, Deputy General Manager (Chennai Division), KVB, the minimum amount of deposit is Rs. 15 lakh and the tenor is 300 days. If one withdraws the deposit amount any time after 15 days of opening the term deposit, there will be no penal interest or penalty. A depositor can withdraw the amount earlier also. But he will be charged a penal interest of one per cent if he does so between 7th day and 14th day. Any withdrawal before 7th day will not fetch any interest.
State Bank of India, for its part, has come out with ‘unfixed deposit' offering interest at 8.5 per cent. It has fixed a higher minimum amount of Rs. 1 crore and above. The period ranges from 7 days to 180 days. There is a facility to withdraw the funds anytime after seven days and the interest is paid at the contracted rate up to the date of withdrawal. It means no penalty will be levied on premature withdrawal of funds. Though there is no lock-in period for such deposit, no interest will be paid if funds are withdrawn before seven days. The product is ideally suited for companies, institutions, trust, societies and associations who look for short-term liquidity. Oriental Bank of Commerce, for its part, has come out with a term deposit scheme under the name liquid deposits. Under this, deposits of Rs. 1 crore and above will earn 9.10 per cent (91-179 days) and 8.50 per cent (7-90 days), respectively. There is no penalty for premature withdrawal.
Yes Bank is offering 9.6 per cent on deposits of 15 months 22 days to 15 months 26 days (which include 480 days).
Saraswat Co-op Bank has launched a term deposit scheme (Bonanza-II) for 2 years only under which it is offering 10.25 per cent for all categories of depositors. It offers 9 per cent for deposits of 180 days only.
