Industry Odisha Bureau, May 10: Since the lucrative interest rates being reportedly offered by the Small Finance Banks (SFBs) across India, experts in bank and money matters have reportedly alerted gullible customers to calmly weigh the pros and cons before jumping into the bandwagon of financial transactions of their hard-earned money.
As per reports, “The SFBs are offering up to 8 per cent FD interest rates, while the senior citizens are being assured extra rates of 0.20-0.50 per cent.”
On the contrary, both public and private sector banks despite being large are reportedly offering “FD interest rates within the range of 6-7.5 per cent.”
Experts in money matters contend that the SFBs are offering comparatively higher FD interest rates to their depositors “in a bid to build strong customer base quickly”.
It has also been contended by the experts that the SFBs “lend loans mainly to the small businesses and micro enterprises at relatively higher interest rates” following which the SFBs are enabled to offer higher interest rates in return for FDs.
Notwithstanding that, experts emphasize on diligently making an intensive review of the concerned SFB’s credit risk/financial health condition as well as the fluctuations in interest rates before investing into it even though “Reserve Bank of India (RBI)’s subsidiary Deposit Insurance and Credit Guarantee Corporation (DICGC) insures bank deposits up to Rs 5 lakh per depositor per bank”.
Notably, “RBI’s DICGS (established on July 15, 1978 under the Deposit Insurance and Credit Guarantee Corporation Act, 1961, Ministry of Finance, Government of India) insures all bank deposits, such as saving, fixed, current, recurring deposit for up to the limit of Rs. 500,000 of each depositor in a bank. The limit was increased from 1 lakh to 5 lakh on 4 February 2020.”
