Since time immemorial, consumers have parked their savings in assets such as gold and land. The problem with Cash is that it does not generate a return. Idle cash loses its value over time because of inflation and can be easily squandered on impulsive purchases.
So our ancestors invested it in gold, land and farm animals. Among these gold is the most liquid asset. In rural areas livestock are considered a preferred investment option because they generate a daily disposable income in the form of earnings from the sale of milk.
With the advent of the modern banking system, fixed deposits emerged as the preferred vehicle for the Aam Aadmi to park his savings. Historically the Fixed Deposit Interest Rates have varied in India. The highest rate of Interest earned on a Fixed Deposit touched 13% in 1995-96, since then the rates have been on a downward spiral.
The maximum that retail investors can now earn is between 5-8%. The longer the tenure of the deposit the higher is the return. If you place a FD for 4-5 years you can expect to earn 8% on it. Earlier postal savings scheme used to provide a high rate of interest to Consumers in India but that too has now been rationalized in line with the rates of public sector banks.
The only other safe avenue of earning a return is by parking your cash in a Savings Account. For 2016 the highest Interest you can get for money kept in a savings bank account is 6.5%. Bandhan Bank offers you 6.5% interest on you bank balance if it is above Rs 1 Lakh. You can refer to rates given below before taking a final decision on where to invest your savings. Other new banks like Ratnakar Bank and Janalakshmi Bank offer similar returns as Bandhan.
|Type||Interest Rates ( Expected Rate of Return)|
|Savings Account||Maximum 6.5% ( Bandhan Bank)|
|Fixed Deposits||Maximum 8.25 %|
|Postal Office Savings Scheme||Maximum 8.6%|
|Gold||10 % (Annualized over the last 50 years)|
Indian Banks Are Rapidly Transforming
Indian PSU Banks have re-invented themselves over the last few years and have also launched intuitive mobile friendly websites. Earlier their websites were not responsive and this affected user experience on tablets and mobiles.
This issue has now been fixed and the website structure and offerings are more rationalized. Users can also refer to their Smart FAQ’s to find answers to their most important questions. The company is now geared up for rapid expansion and intends to target new segments of India’s millennial population.