ASSURED

MAY 2023 A
BANKBAZAAR
PRIMER

RETURNS
8% RETURNS &
WHERE TO FIND THEM
DISCLAIMER:
1. Nothing in this document
should be construed as
investment advice.
2. Please understand the various
risks in the fixed income
market and consult a financial
advisor before taking any
investment decisions.
3. BankBazaar will not be liable
for any losses caused to you by
the use of any information
contained in this document.
4. Interest rate data is time-
sensitive and liable to change.
BankBazaar takes no
responsibility for its accuracy.
PAGE 1 ASSURED RETURNS
HAVE INTEREST
RATES PEAKED?
A LOOK AT ADVISORIES FROM CENTRAL
BANKS PROVIDES SOME CLUES
Softening inflation gave the Reserve
Bank of India a chance to pause the
repo rate at 6.50% in April. Many have
taken this to be a peaking of rates
preceding a fall. However, the RBI said
that things aren't that simple due to
ongoing economic complexities.
The RBI governor Shaktikanta Das clarified that it
was not a pivot to rate cuts but a pause, and the RBI
will act to raise rates again if inflationary pressures
so demand.
The weighted average interest rates on new term
deposits with all commercial banks had risen
sharply from 4.12% to 6.48% between March 2022
and 2023, as per the RBI. We also saw the repo rate
hiked six times from 4.00% to 6.50%. Most banks,
big or small, increased their deposit rates from
around 5% to over 7%. Some small banks are now
accepting deposits at over 9%, and most banks now
pay 7.50% or better to senior citizens.
Inflationary pressures have hurt household
finances. Returns from fixed income
instruments, the subject of this primer, have been
negative in this period despite higher rates. Costs
of essential goods such as food increased sharply
while fixed income returns struggled to keep up
with inflation. But there seems to be light at the
end of this tunnel.
Cost price inflation had eased to 4.70% in April,
the lowest it had been since October 2021. Many
experts see inflation returning to the RBI's
tolerance band of 4-6% in 2023.
In May, the 10-year sovereign bond had eased to
6.987, the lowest it had been since March 2022.
The Centre for Monitoring Indian Economy
noted that food inflation, too, is thinning and
expected to close at 2.6% in April compared to
4.8% in the prior month.
Where does that leave interest rates and returns
from fixed income instruments? Let's take stock
of the risks and rewards today.
© BANKBAZAAR.COM
PAGE 2 ASSURED RETURNS

FIXED DEPOSITS
GOVERNMENT BANKS:
THE CROWD FAVOURITE

Senior Citizen
Bank Highest Rate Tenor For Highest Rate Senior Citizen Rates
Premium
Punjab & Sind Bank 7.35 555 days 0.50 7.85
Union Bank 7.30 800 days; 3 years 0.50 7.80
Central Bank of India 7.25 444 days 0.50 7.75
Punjab National Bank 7.25 666 days 0.50 7.75
Canara Bank 7.25 444 days 0.50 7.75
Bank of Baroda 7.25 399 days 0.50 7.75
Indian Bank 7.25 400 days 0.50 7.75
Indian Overseas Bank 7.25 444 days 0.50 7.75
UCO Bank 7.20 666 days 0.50 7.70
Bank of India 7.15 444 days 0.50 7.65
State Bank of India 7.10 400 days 0.50 7.60
Bank of Maharashtra 7.00 200 days 0.50 7.50
The above are the highest advertised rate on May 13, 2023 for retail term deposits for that bank and applicable on select tenors only. The bank may revise the rate at
any point as per its policies. The rates on other tenors are different. Some banks may offer higher rates for non-callable, bulk, or special deposits. Some banks may also
offer higher rates for super senior citizens or women. For clarity, please contact the bank you're interested in.

Indian depositors trust government banks due to
several reasons. First, government banks are
perceived as safe and reliable because they are
owned and backed by the Government of India.
This provides a sense of security and trust among
depositors. Secondly, government banks have a
long-standing history and reputation in India. This
legacy has contributed to their credibility and
trustworthiness in the eyes of the public.
Government banks are omnipresent with branch
networks in the deepest corners of India.
As interest rates peak, all government banks today
offer deposit rates exceeding 7% on select tenors.
Depositors can select the longest available tenors
to lock into these rates. This would reduce
reinvestment risk for them since these rates are
likely to fall in the future.
Due to the safety associated with government
banks, they're seen asrobust and well-capitalised.
These rates are not likely to go too far up from here
and depositors should make the most of it now.

© BANKBAZAAR.COM
PAGE 3 ASSURED RETURNS

FIXED DEPOSITS
PRIVATE BANKS: HIGHER RETURNS,
QUALITY SERVICE
Senior Citizen Senior Citizen
Bank Highest Rate Tenor For Highest Rate
Premium Rates
Bandhan Bank 8.00 600 days 0.50 8.50
DCB Bank 8.00 700 days to 36 months 0.50 8.50
RBL Bank 7.80 453 to 725 days 0.50 8.30
Yes Bank 7.75 18 to < 36 months 0.50 8.25
IndusInd Bank 7.75 18 to 39 months 0.50 8.25
IDFC First Bank 7.75 549 days to 3 years 0.50 8.25
Karur Vysya Bank 7.50 444 days 0.50 8.00
TNSC Bank 7.50 600 days 0.50 8.00
South Indian Bank 7.40 500 days 0.00 7.40
Karnataka Bank 7.30 375 days 0.40 7.70
Tamilnad Mercantile Bank 7.25 1 year 0.50 7.75
Catholic Syrian Bank 7.25 444 days 0.00 7.25
Federal Bank 7.25 15-24 months 0.50 7.75
Dhanlaxmi Bank 7.25 555 days 0.50 7.75
Axis Bank 7.20 24 to < 30 months 0.75 7.95
Kotak Mahindra Bank 7.20 390 days to < 24 months 0.50 7.70
J & K Bank 7.10 12 to < 24 months 0.50 7.60
Nainital Bank 7.10 400 days 0.50 7.60
HDFC Bank 7.10 15 - < 18 months 0.50 7.60
City Union Bank 7.00 400 days 0.50 7.50
ICICI Bank 7.00 15-24 months 0.50 7.50
The above are the highest advertised rate on May 13, 2023 for retail term deposits for that bank and applicable on select tenors only. The bank may revise the rate at any
point as per its policies. The rates on other tenors are different. Some banks may offer higher rates for non-callable, bulk, or special deposits. Some banks may also offer
higher rates for super senior citizens or women. For clarity, please contact the bank you're interested in.

Private Indian banks are loved by consumers for
offering higher deposit returns than government
banks. Private banks also tend to offer more
innovative and personalized financial products and
services, including wealth management,
investment advice and digital banking. This has
made them popular among the younger and tech-
savvy generation. Overall, the combination of
higher returns and personalized services has made
private Indian banks an attractive option for
consumers looking to maximize their savings and
investments.
The rates offered by large private banks are at par
with large government banks. However, customers
often report a preference for attentive customer
service and digitisation, which leads them to
private banks. The smaller private banks are also
reporting deposit rates of 8% now which would
attract many depositors.

© BANKBAZAAR.COM
PAGE 4 ASSURED RETURNS

FIXED DEPOSITS
SMALL FINANCE BANKS:
MAKING AN IMPACT
Senior Citizen Senior Citizen
Bank Highest Rate Tenor For Highest Rate
Premium Rates

Suryoday Small Finance Bank 9.10 999 days 0.50 9.60

Unity Small Finance Bank 9.00 1001 days 0.50 9.50

ESAF Small Finance Bank 8.50 2 to < 3 years 0.50 9.00

Equitas Small Finance Bank 8.50 888 days 0.50 9.00

Ujjivan Small Finance Bank 8.45 560 days 0.75 9.20

Fincare Small Finance Bank 8.41 1000 days 0.60 9.01

Utkarsh Small Finance Bank 8.25 700 days 0.75 9.00

Jana Small Finance Bank 8.15 500 days 0.70 8.85

North East Small Finance Bank 8.00 1111 days 0.75 8.75

Shivalik Small Finance Bank 8.00 18 to 36 months 0.50 8.50

AU Small Finance Bank 8.00 > 24 to 45 months 0.50 8.50

Capital Small Finance Bank 7.60 12 months; 600 days 0.65 8.25
The above are the highest advertised rate on May 13, 2023 for retail term deposits for that bank and applicable on select tenors only. The bank may revise the rate at any
point as per its policies. The rates on other tenors are different. Some banks may offer higher rates for non-callable, bulk, or special deposits. Some banks may also offer
higher rates for super senior citizens or women. For clarity, please contact the bank you're interested in.

Small Finance Banks (SFBs) are a category of banks than larger banks. Their higher-yielding assets help
in India that were established to cater to the them pay depositors these above-average deposit
unbanked and underbanked sections of the rates which are now exceeding 9% in some cases.
population, including micro and small enterprises, Most SFBs today offer deposit rates above 8%, with
low-income households, farmers, and small senior citizens being offered 9%.
businesses. And they're making a splash with
deposit rates. But higher returns often come with higher risks
which depositors must understand. Depositors
These banks are regulated by the Reserve Bank of should carefully evaluate the credibility and
India and are required to adhere to the same financial strength of SFBs before investing their
prudential norms and regulations as other banks. money.

SFBs are attractive to depositors because they offer Adhering to the DICGC insurance coverage limit of
some of the highest deposit rates in the market. ₹5 lakh may help depositors keep their money in
They're able to do this by lending at higher rates case their bank undergoes a crisis.

© BANKBAZAAR.COM
PAGE 5 ASSURED RETURNS

CORPORATE FIXED DEPOSITS

COMPANIES, NBFCS AND HFCS:
HIGHER REWARDS, HIGHER RISKS
Senior Senior
Highest
Company Credit Rating Tenor For Highest Rate Citizen Citizen
Rate
Premium Rates

Bajaj Finance 8.35 44 months 0.25 8.60

Sundaram Home Finance 7.90 48-60 months 0.35 8.25

Mahindra Finance 7.75 42 months 0.25 8.00

Sundaram Finance AAA 7.75 24-36 months 0.50 8.25

LIC Housing Finance 7.75 36-60 months 0.25 8.00

ICICI Home Finance 7.60 45 months 0.25 7.85

HDFC Ltd 7.60 45 months 0.25 7.85

Shriram City Union Finance 8.18 50-60 months 0.50 8.68

AA
PNB Housing Finance 7.70 36-47 months 0.25 7.95

The above are the highest advertised rate on May 13, 2023 for cumulative, retail term deposits for that company and applicable on select tenors only. The company may
revise the rate at any point as per its policies. The rates on other tenors are different. Some companies may offer higher rates for non-callable, bulk, or special deposits.
Some companies may also offer higher rates for super senior citizens or women. For clarity, please contact the company you're interested in.

Corporate fixed deposits (CFDs) are fixed-income
instruments issued by companies to raise capital
from the public. CFDs offer higher interest rates
than traditional bank FDs, making them an
attractive investment option for Indian depositors
seeking higher returns.
However, investing in CFDs carries a higher degree
of risk. The creditworthiness of the issuing
company must be thoroughly evaluated before
investing in their corporate FDs, as there is a risk of
default on interest or principal payments.
Unlike bank deposits, CFDs are not insured by the
DICGC, so no deposit insurance claims can be
made in case of a default. Investors should also
consider the liquidity of the CFD before
investing, as early withdrawals may result in
penalties. Corporate FDs typically have a fixed
tenor ranging from a few months to several years.
Credit ratings may help depositors understand
which CFDs are considered the safest. AAA-rated
and AA-rated CFDs are issued by some of the most
well-know financial institutions which are often
part of large business conglomerates. These
companies have an excellent track record in
managing depositor money.
Overall, corporate FDs can provide higher returns
than traditional bank deposits, but investors must
carefully evaluate the creditworthiness of the
issuing company and consider the risks involved
before investing.

© BANKBAZAAR.COM
PAGE 6 ASSURED RETURNS

SMALL SAVINGS SCHEMES

GREAT REWARDS WITHOUT THE RISKS
Small Savings Scheme Instrument Rates for April-June Quarter Tenor

Senior Citizens' Saving Scheme 8.20% 5 years

Sukanya Samriddhi Yojana 8.00% 21 years

National Savings Certificate 7.70% 5 years

Public Provident Fund 7.10% 15 years

Kisan Vikas Patra 7.50% 115 months

Post Office Savings Account 4% -

Post Office Recurring Deposit 6.20% 5 years

Post Office Monthly Income Scheme 7.40% 5 years

Post Office Time Deposit (1 year) 6.80% 1 year

Post Office Time Deposit (2 years) 6.90% 2 years

Post Office Time Deposit (3 years) 7.00% 3 years

Post Office Time Deposit (5 years) 7.50% 5 years

Rates applicable for the April quarter only and may be revised for future quarters.

Indian investors have long trusted small savings
schemes. Also called postal schemes, options such
as the Public Provident Fund (PPF) are safe and
reliable. There are several reasons for this.
Firstly, these schemes are backed by the Indian
government and are considered a sovereign
guarantee. This provides a sense of security and
trust among investors, particularly those who
may be risk-averse or seeking a low-risk
investment option.
Secondly, these schemes offer attractive interest
rates and tax benefits. The rates are typically higher
than bank fixed deposits, making them attractive
for long-term savings. Additionally, PPF, NSC, SSY
and SCSS allow tax deductions under Section 80C
of the Income Tax Act.
Thirdly, these schemes are accessible and
convenient. They are provided through a large
network of post offices and authorised banks
across the country, even in rural areas. This makes
it easy for investors to open and maintain their
accounts, without the need for a high level of
financial literacy or access to internet banking.
Finally, many of these schemes are best-in-class
debt schemes for eligible investors: SSY for girls,
PPF for retiral savings, and SCSS for senior
citizens. This allows investors to choose the option
that best fits their financial goals and risk appetite.
Overall, the combination of government backing,
attractive interest rates, tax benefits, accessibility,
and choice of investment options has made post
office savings schemes popular.

© BANKBAZAAR.COM
PAGE 7 ASSURED RETURNS

DEBT MUTUAL FUNDS

SOMETHING FOR EVERYONE
Debt Mutual Fund Returns By Categories
No. Category YTD 1 Year 3 Years 5 Years 10 Years
1 Overnight 2.29 5.70 3.97 4.58 5.87
2 Liquid 2.41 5.95 4.14 5.09 6.53
3 Ultra Short Duration 2.42 5.77 4.50 5.11 6.73
4 Low Duration 2.56 5.89 5.43 5.51 6.75
5 Money Market 2.60 6.06 4.63 5.78 6.91
6 Short Duration 2.76 6.32 5.78 6.06 6.98
7 Medium Duration 3.09 7.61 6.49 6.04 7.13
8 Medium to Long Duration 3.58 7.11 5.02 6.23 6.45
9 Long Duration 5.25 9.69 4.54 7.11 7.03
10 Dynamic Bond 3.20 6.84 5.22 6.64 7.15
11 Corporate Bond 2.83 6.24 5.39 6.78 7.10
12 Credit Risk 2.99 6.69 9.82 4.37 6.20
13 Banking and PSU 2.84 6.17 5.38 6.90 7.35
14 Gilt 3.62 7.09 4.35 7.22 7.21

15 Gilt with 10 year Constant Duration 4.57 8.11 4.07 7.69 8.80
16 Floater 2.72 6.20 5.64 6.54 7.20
Data as of May 14, 2023. Source: Value Research. Returns pertain to categories and not individual funds.

Debt mutual funds are a popular investment option
for Indian investors looking for steady returns with
relatively low risk. India has 16 categories of debt
mutual funds, each with its own unique investment
objective and risk profile.
returns can opt for corporate bond funds or
banking and PSU funds. Dynamic bond funds are
suitable for investors seeking to take advantage of
interest rate movements. Gilt funds are ideal for
investors seeking low-risk and moderate returns.

Every Indian investor can benefit from investing in
debt mutual funds according to their investment
objectives and risk profile. Investors seeking low-
risk investments with high liquidity can opt for
overnight or liquid funds. Investors seeking slightly
higher returns can choose ultra-short duration or
low duration funds.
Medium to long duration or credit risk funds are
suitable for investors with a higher risk appetite,
while those seeking moderate risk with higher
Investors must conduct thorough research and
consult with a financial advisor before investing in
any mutual fund. Debt funds are subject to market
risks, including the possibility of loss of principal.
However, investing in debt mutual funds can
provide an alternative to traditional fixed-income
investments like fixed deposits and offer attractive
returns, particularly for long-term investment
horizons.
Consult an investment advisor before proceeding.

© BANKBAZAAR.COM
PAGE 8 ASSURED RETURNS
GOVERNMENT SECURITIES
SOVEREIGN, SAFE, SUPER
Central and state government bonds are fixed-
income instruments issued by the respective
governments to raise funds. These bonds offer
assured returns to investors and are backed by the
creditworthiness of the government, making them
a relatively low-risk investment option.
Investing in government bonds can provide
investors with a steady stream of income in the
form of interest payments and capital appreciation
if allowed by market conditions. The interest rates
offered by government bonds are typically higher
than those offered by traditional fixed-income
investments like bank fixed deposits.
NON-CONVERTIBLE DEBENTURES
CORPORATE DEBT FOR HIGHER RETURNS
Non-convertible debentures (NCDs) are fixed-
income instruments issued by companies to raise
capital from the public. Unlike convertible
debentures, NCDs cannot be converted into equity
shares of the issuing company at a future date.
NCDs typically offer higher interest rates than
traditional fixed-income investments like bank
fixed deposits, making them an attractive option
for investors seeking higher returns. NCDs are
typically issued in denominations of Rs.1,000 or
higher and have a fixed tenor, ranging from a few
months to several years.
Investors can invest in NCDs by subscribing to
them during their initial public offering (IPO)
Government bonds can be purchased directly from
the government or through authorized dealers
such as online trading platforms. They are
available in different tenors, ranging from a few
months to perpetuity. You can buy a bond from a
new public offering, or buy existing bonds from
the secondary market. Thanks to fintech
innovations such as RBI Retail Direct, you can buy
some of these bonds for as little as ₹10,000.
Investors must carefully evaluate the prevailing
interest rate environment and consult with a
financial advisor before investing in government
bonds.
or by purchasing them from stock exchanges like
the National Stock Exchange (NSE) or Bombay
Stock Exchange (BSE) after they are listed for
trading. NCDs can be bought and sold on stock
exchanges like shares, making them a liquid
investment option.
However, investing in NCDs involves a certain
degree of risk. The creditworthiness of the issuing
company must be thoroughly evaluated before
investing in their NCDs, as there is a risk of default
on interest or principal payments. Credit ratings
are instructive in this regard. Investors must also
consider the prevailing interest rate environment
and the liquidity of the NCD before investing.
© BANKBAZAAR.COM
Author & Researcher co-branded credit cards in force over the next couple
AR Hemant of years.
AVP, Communications
arhemant@bankbazaar.com Supported by global investors such as Experian, Eight
Roads, Sequoia India, WSV, and Amazon, BankBazaar
Editor has been at the forefront of democratising finance by
Nanda Padmanabhan providing Indians with frictionless access to credit.
AGM, Corporate Communications
nandap@bankbazaar.com The company exited FY2022 with a revenue ₹160
crore, growing 60% year-on-year with EBITDA
Copy Editor profitability on a monthly basis attributed to its co-
Malvika Singhal brand model.
Assistant Manager, Communications
malvika.singhal@bankbazaar.com Adhil Shetty, CEO, BankBazaar.com, said:
“BankBazaar has been focussed on three things: great
About Us technology, customer focus, and the bottom-line. I
BankBazaar.com is India’s largest fintech co-branded am proud to say that we are one of the few fintechs in
credit card issuer and online platform for free credit the world to be growing rapidly and profitably.
score. It has a base of 56 million registered users who
use the platform for free credit score tracking and in- BankBazaar is well positioned to accelerate this
depth personal finance content and comparison tools. revenue growth rate further in FY24 while targeting
full year EBITDA profitability. This strategy for
Its range of co-branded credit cards with India’s profitable and sustainable growth has been in the
leading banks is driving the platform's rapid growth works for over three years. We’ve built a co-branded
with more than half its customers now opting for portfolio of digital products with proven customer
BankBazaar's own co-branded products. The company traction, which has created sustainable revenue while
is on track to facilitate one million active BankBazaar improving margins."

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