The Indian economy is likely to experience recession by the financial year 2020 along with the rest of the world, as predicted by the International Monetary Fund. With quarterly growth reports at 4.5% between June-September, lowest in six years, the RBI has implemented five successive repo-rate cuts in the year of 2019 to revive the growth rate of the country, currently standing at 5.15%. Such repo rate cuts are known to have a direct effect on the fixed deposit schemes under the new repo-linked regime, wherein total interest returns are expected to fall.

Even though such policies are implemented in light of recent weakening aggregate demand in India, such a reduction in the rates of savings instruments is likely to hurt individuals dependent on a fixed source of income. To safeguard the financial interests of such investors, many non-banking financial corporations still offer some of the highest FD rates in India.

Best FD schemes in India in 2020

In the event of lower growth projection of India by IMF to 5% from 6.1% in October 2019, as well as adverse fluctuations in the Indian stock market, most individuals are turning towards stable return generating instruments.

Even though the aggregate fixed deposit rates are currently in a downtrend owing to the efforts of the government to ease overall spending, certain non-banking financial corporations are still offering such instruments generating more than 8% returns, which pose as the highest FD rates in India.

Such NBFCs are slowly gaining popularity as individuals can invest for higher returns for fixed deposit. For example, institutions such as Bajaj Finance offer up to 8.10% interest on their fixed deposit.

Such high return generating instruments, extended by numerous financial institutions, come with the various provisions to suit the requirements of all kinds of investors in the country.

Highest FD rates in India

A minimum deposit of Rs.25,000 has to be made to enjoy high returns on such cumulative fixed deposits, stated as follows –

• Up to 7.60% interest is extended for deposits having a tenor ranging from 12 to 23 months. For senior citizens, rates are applicable at 7.85%.
• For tenor of 24-25 months, the interest rate offered can go up to 7.90%, with senior citizens getting 8.15%.
• Individuals can opt for fixed deposits having a tenor of 3 to 5 years with interest levied at 8.10% and 8.35% (for senior citizens) respectively.

You can quickly analyse how the tenor on your FD affects its interest rate through the above mentioned points. Similar interest rates are offered to non-resident individuals maintaining a fixed deposit with an NRO account.

Additionally, individuals having past ties with a specified financial institution can also increment their monthly earning by bumping their existing funds to such fixed deposits upon maturity.

For non-cumulative deposits having monthly, quarterly or half-yearly interest pay-out benefits, the rates can be demonstrated as follows –

• for deposit tenor of 12-23 months – 7.35% (monthly), 7.39% (quarterly), 7.46%(half-yearly)
• for deposit tenor of 24-35 months – 7.63% (monthly), 7.68% (quarterly), 7.75%(half-yearly)
• for deposit tenor of 36-60 months – 7.81% (monthly), 7.87% (quarterly), 7.94%(half-yearly)

As of December 2019, the highest FD rates in India averages around 8% respectively. This effectively helps individuals tackle retail inflation persisting at 4.62% as of October 2019, by allowing them to experience real growth of more than 3% on the total investment.

Since fixed deposits have no intermittent ties to the stock market of India, which has been witnessing fluctuations since the end of 2018, such stable returns are ideal for both cautious investors, as well as individuals relying on a fixed source of income.

Also, fixed deposits pose as one of the most liquid investment assets when compared to stock market instruments. Untimely withdrawals from investments in stock market tools might have a crushing effect on the financial status of individuals, owing to the highly volatile and unstable nature of the market. Nonetheless, such risks are not associated with fixed deposit investments, and premature withdrawals are subject to nominal interest charges respectively.

With such highest FD rates in India provided by financial institutions, a multitude of benefits can be enjoyed by investors through higher returns, stability and protection of capital as well as a hedge against prevailing inflation.