Highest Bank Fixed Deposit rates for different time periods

The interest rates are peaking across different maturities and here is quick review of the highest interest rates across different time frames offered by various banks. 

Time Period Bank(s) Interest rate

15 - 29 days Barclays Bank  6.75%

30 - 45 days Barclays Bank, 

DBS Bank 7.25%

46-60 days Oriental Bank of 

Commerce 8.25%

61 - 90 days  Oriental Bank of

Commerce 8.25%

91 - 179 days ING Vysya Bank 10.00%

180 - 364 days State Bank of 

Hyderabad 10.25%

1 yr - 2 yrs DBS Bank 11.25%

2 yrs - 3 yrs CUB, KVB, LVB 11.00%

3 yrs - 5 yrs  Karnataka Bank 11.00%

In addition to the above, there are "Special Deposit Rates" offered by banks which are as follows:

Bank Rate Term (Days)

ICICI Bank 10.50% 890

City Union Bank 11.30% 1000

Federal Bank 10.00% 365

Standard Chartered 10.00% 401

ING Vysya Bank 10.50% 365

Tamilnad Mercantile

Bank 11.00% 1095

Please note that these special deposit rates are applicable only if you choose the specified term mentioned above. 

Make best use of this opportunity to lock in your fixed deposits componenet of your asset allocation. 

Real Estate gets little relief in Andhra Pradesh

The Andhra Pradesh Government has recently announced the following concessions to prop up the ailing real estate industry in the state:

The concessions offered are:

* Stamp duty on new houses of area up to 1200 sq.ft would be exempt from January 1, 2009 to December 31, 2010.

* Building approval and permit fee has also been exempted.

* City level infrastructure is also allowed to be paid in four-six monthly instanlements during th period of construction. 

We believe this would start the process of exempting stamp duty and offering other benefits to real estate developers in various other states as well.  The concessions should be time bound and withdrawn once the overall market recovers in the next 2-3 years.  Else, this would become a matter of right for the consumers and it would lead to large scale protests when these concessions are withdrawn.  The Government would be forced to keep extending the benefit just like what is happening with STPI benefits for IT/ITES companies.  

Coupled with the recent reduction in loan interest rates on housing and the proposed exemption of stamp duty, the buyers gets real bargains while buying the house.  

Time to lock into Fixed Deposits - Part III

After completing the first two parts on the attractive fixed deposit interest rates currently prevalent in the banking sector, we have been contacted by various people if they could committ into fixed deposits for 3 years for the entire corpus/savings they have.

We have also come across advertisements from banks over the last week or so where the interest have still gone up from the 10.50 - 11.00% bracket to above 11%. This is particularly very evident in the case of private sector banks and makes it all the more enticing.

The rates looks very tempting for lay investors. But at the same time, it is very important to note that the time-frame of the deposit should be decided by the funds requirements of the individuals. Just because a bank offers higher interest rates, the deposits should not be contracted for a longer time-frame. It should be aligned with the individual's funds requirement before the tenure of the fixed deposit is committed. In case you have surplus money which you may not require for a longer tenure, then it makes sense to lock into deposits at higher rates, but at the same time maintain your assset allocation matrix.

One should also remember that Fixed Deposits are only a portion of your investment portfolio and higher interest rates alone should not influence you to have a very high proportion of your investments in fixed deposits. When we take into account the inflation rate of around 8%, and the deposit rate of 11%, technically it means that you are able to get a real effective interest rate of only 3% or so pre-tax. Post-tax, the return would be much lower. Therefore, in order to grow your investments and build the corpus for meeting your future financial goals or retirement, you need to ensure that investments are also channeled to other investment avenues like equity, gold etc.,

The other point to remember is to spread your deposits across different banks with a maximum limit of Rs100,000/- to take advantage of the Deposit Insurance scheme. Though it involves more running between the banks, it may be prudent to do so.

Just for information purposes, few attractive interest rate options which has come up from private sector banks are:

1. City Union Bank is offering 11.30% on 1000 day deposit. Karur Vysya Bank is offering 11% on a 3 year deposit.
2. Standard Chartered Bank is offering 11.00% on 90 days short term deposit.
3. In Chennai, REPCO Bank Ltd., is offering 11.50% on 40 months deposit. But please note that REPCO Bank deposits doesnt come under Deposit Insurance Guarantee scheme.