A snapshot of FD rates offered by small finance banks and others

While these banks are safe, diversify your fixed deposits among large banks, small finance banks and highly rated corporates

• Small finance banks are offering higher interest rates than bigger banks because they are looking to attract more deposits 
• Many were micro-finance institutions that earlier borrowed from banks at 11-12 per cent
• Even if their deposit rates are higher than those of bigger banks, it still means that their cost of funds has come down 
• They are new entities, but they are regulated by the Reserve Bank of India, and deposits up to Rs 100,000 are insured
• Nonetheless, diversify your bank fixed deposits with the larger portion going into larger banks and a smaller portion into small finance banks  
• If you decide to opt for company fixed deposits as well, choose companies having a AAA rating from credit rating agencies