Suryoday, a small finance bank that started banking operations last week, will offer 9% on fixed deposits with a maturity of 1 to 2 years, said a top official.
Senior citizens will get 75 basis points (bps) more on such deposits, R.Baskar Babu, managing director and chief executive officer of Suryoday, informed the media.
The announcement comes at a time when interest rates are falling with large universal banks offering no more than 7% on deposits of similar tenure.
These banks typically offer 50 bps more to senior citizens.
“Our objective is to replace the existing borrowing for which the weighted average cost is 12.5%,” Mr.Babu said.
Suryoday, which was a micro finance institution (MFI), has converted into a small finance bank. As a MFI, it did not have access to public deposits. The lender also said it will offer 6.25% on savings bank deposits of up to ₹1 lakh.
“We plan to mobilise ₹500 crore of deposits in the first year of operations and ₹1000 crore by the end of March 2019,” he said.
As a MFI, it had a net interest margin of 11% which will reduce to and stabilise at about 8–9% in one year, Mr Babu said.