You can earn up to 7.25% on your savings account with this bank: Details

With the new interest rate, the Bank is reinforcing its commitment to promoting a culture of savings thereby building financial corpus and in turn, self-reliance.

 Effective 1 August, Fincare Small Finance Bank is offering an interest rate of 7.25% on  Savings Account (with balance above Rs 5 Lakhs and including Rs 25 lakh.

The revised Savings Bank Deposits rates w.e.f. 1st August 2023 are given below:

"At Fincare Small Finance Bank, our focus has always been on empowering our customers to achieve their financial goals. With the industry-leading interest rate of 7.25% on our Savings Account, we aim to incentivize savings and provide secure and rewarding banking experience to our valued customers," said Ashish Misra, Chief Operating Officer – Retail Banking.

Before you get lured by these high interest rates, keep these factors in mind: 

A small finance bank from lending perspective is placed between Scheduled Commercial Banks and NBFCs.  They focus on underserved sectors and small ticket loans compared to main stream banks financing lesser riskier assets. Because of this business model, they offer better savings rates as their cost of borrowing is higher than mainstream banks.

 Here are some key points to consider when making your decision about where to park your funds:

Who is more credible?  Public banks generally have a long-established presence and a solid reputation. They are often considered more reliable due to their extensive network, government backing, and adherence to strict regulations.

 Small finance banks, on the other hand, are relatively new and may not have the same level of brand recognition or history.. Small finance banks also operate with a smaller capital base, and their focus on unsecured lending to riskier segments of the population makes them more susceptible to defaults and non-performing assets.

"Get started by reviewing how secure the bank is. Check their records, if they’ve been in the news recently and reviews from other customers on online portals. If you find their record to be squeaky clean you can go ahead and invest," said Adhil Shetty, CEO of BankBazaar.

Check the credit rating: If you are getting lured by the high interest rate offered by a small savings bank, do check the Crisil rating. Apart from company FDs, this agency awards ratings to bank fixed deposits to indicate how safe they are. FAAA or FAA is the best rating for a fixed deposit whose tenor is greater than a year, whereas for deposits that have a tenor of less than 12 months, the rating you should look for is CRISIL A1+, explained Shetty.

Safety of Deposits:

In India, deposits up to Rs 5 lakh (per bank, per depositor) are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC).

Both small finance banks and public banks fall under this insurance scheme. Check the specific details and ensure that your chosen bank is a member of the DICGC. Manage your exposure to a small finance bank to never exceed Rs 5 lakh.

Services and Convenience:

Consider the convenience and accessibility of services provided by the banks. Large public banks generally have a wide network of branches and ATMs, making it easier to access your funds and manage your fixed deposit. Small finance banks may have a more limited network, which could be a consideration if branch access is important to you.