Which Bank Offers the Highest Interest Rate on a Savings Account in India?

Interest rates on savings accounts in India are subject to fluctuation. For most of the time, Deposit-taking Non Banking Financial Companies (NBFCs) offer the highest interest rates. However, these NBFCs are not authorized to accept demand deposits, meaning your money is only accessible after a predetermined period, akin to fixed deposits.

While NBFCs provide high interest rates, they are not as strictly regulated as commercial banks and pose a risk factor. Deposits in NBFCs are not covered under DICGC (Depositors Insurance and Credit Guarantee Corporation), and in case of the NBFC's inability to pay, there will be no reimbursement.

Commercial Banks and Fixed Deposits (FDs)

For those seeking the safest option with good returns, commercial banks, including PSUs, are the way to go. Fixed Deposits (FDs) from commercial banks typically provide interest rates above 8%, but may not offer the highest rates available.

Airtel Payments Bank’s Savings Account

I recently opened an account with Airtel Payments Bank and have been impressed with the interest rates it offers. Airtel Payments Bank provides a tiered interest rate structure:

This is somewhat better than most banks and even certain fixed deposits. The process of opening the account was straightforward, involving downloading the Airtel Thanks app, requesting the account, and completing a video verification process. Airtel Safe Pay, a new security feature, adds an extra layer of security, requiring approval for final transactions beyond the usual OTP and MPIN verification.

Savings Account Security and Insurance

It's important to note that no bank, including PSUs, is fully safe. All deposits, including those in savings accounts, are insured up to Rs. 5 lakhs per customer through DICGC. Even if the government steps in through the Reserve Bank of India (RBI) to save the bank, there is no guarantee that they will always do so.

For the safest option, consider keeping your principal and interest deposits up to Rs. 5 lakhs in different banks for full protection, or opt for the Indian Post Office, where your savings are fully safe and guaranteed by the Indian Government.

Conclusion

While Airtel Payments Bank and other NBFCs offer attractive interest rates on savings accounts, it's crucial to balance the benefits of higher returns with the potential risks involved. For truly safe savings, the Indian Post Office remains the most secure option in India, offering full protection for your principal and interest up to Rs. 5 lakhs.