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Mumbai-based bank offers inflation-beating rate of 7.5% on FDs, senior citizens biggest beneficiary

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Thanks to multi-year high inflation, hedging real returns on your hard-earned money has become very important. Due to high inflation, there is a rise in consumer prices and the cost of investments, meanwhile, the value of money dips. This also leads to a reduction in the value of savings when it was earned. Thereby, it is usually guided to always keep the inflation rate in mind when choosing your fixed deposit account. A comparison between how much rate of return your bank offers and how much is the inflation rate — will help in understanding the real rate of returns on your investment.

FDs are the most traditional investment schemes available in India giving guaranteed returns and eliminating risks. FDs are for those who do not wish to take risks in market-related instruments as they are sentiment-driven and returns are volatile every year.

Currently, the country’s CPI inflation rate is at 7%. 

Yes Bank is a private banker based in Mumbai. A fixed deposit account here can be opened with a minimum deposit of 10,000. The bank is offering an inflation-beating rate of returns on FDs between 10,000 to less than 5 crore. 

With effect from October 1, on FDs between 10,000 to less than 5 crore, Yes Bank offers a 1.10% to 1.60% mark-up rate on the current repo rate of 5.9% on tenues from 1 year to less than 3 years.

Notably, the mark-up rate is the additional rate of interest offered by the bank over and above the base rate which is the REPO rate in this case.

That said, Yes Bank is offering a 7.50% interest rate on the mentioned FDs with a maturity period of 18 months to less than 3 years. On 1-year to less than 18 months tenure, the rate is set at 7%.

There are additional rate benefits offered to senior citizens. An elderly opening an FD account between 10,000 to less than 2 crore, will additional 0.5% interest rate on tenures 1 year to less than 36 months. Further, the additional rate benefit is 0.45% on FDs between 2 crore to less than 5 crore on tenures from 1 year to less than 18 months, while the additional rate is 0.25% on FDs maturing from 18 months to less than 36 months.

In case of an increase in RBI’s repo rate, Yes Bank on its website stated that there shall be an increase in the effective interest rate & likewise any decrease in the REPO rate, shall result in a decrease in the effective interest rate of the Floating Rate Fixed Deposit.

Also, on premature withdrawal of FDs less than 5 crore, Yes Bank has levied penalties. There is a penalty of 3% on FDs with a tenure of 7 days to 90 days, while a 2.5% penalty rate is imposed on FDs having 91 days to 181 days tenure. The penalty rate is 2% and 1% on FDs with a maturity period from 182 days to less than 12 months, and from 12 months to less than 36 months.

Among other features of Yes Bank’s FD accounts are:

– Investors can maximise their returns by taking advantage of the dynamic interest rate.

– Yes Bank offers the option of automatic reset of the interest rate monthly as per the applicable REPO rate in the previous month.

– It also gives liquidity with an Overdraft facility on FDs. An investor can enjoy liquidity with OD up to 90% of the principal value.

– The reinvestment option is available only with payout at maturity.

– There is flexibility in choosing tenures from 1 year to less than 3 years.

– The interest rates are floating in nature and benchmarked to the repo rate.

– Also, senior citizens get an additional 0.50% interest rate for a value less than 2 crore and up to 0.45% for a value of 2 Crore to less than 5 crore.

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