How does Deal4loans make money

FIS assignment

An interest rate of 9.50 per cent per annum on a fixed deposit may look attractive to
many at a time when most of the commercial banks are offering an interest rate of 7-7.5
per cent.

State Bank of India is offering an interest of 7 per cent per annum on three-year fixed
deposits. On the other hand, cooperative banks offer much higher interest. For
example, Mahaveer Co-Operative Bank, Abhinav Sahakari Co-operative Bank and
Municipal Co-Operative Bank offer 8.50-9.50 per cent interest on fixed deposits of
similar maturity.

A 150-percentage-point difference in interest rates could result in Rs. 1 lakh more


interest on a fixed deposit of Rs. 10 lakh for five years.

No wonder, many retirees - who invest heavily in fixed deposits to draw regular income -
get attracted towards co-operative bank fixed deposits, ignoring the inherent risk.

Many co-operative banks have failed over time. Commercial banks are more tightly
regulated than co-operative banks. Also, unlike commercial banks, the information
related to the financial health of co-operative banks is not readily available.

Rishi Mehra, founder of Deal4Loans, says it is not worth taking the risk for that extra
1.5-2 per cent interest due to failure of many cooperative banks in the past.

"As these banks give loans to local farmers and small business holders in the area they
operate, they fail as their risks are not spread across sectors well, "he added.

However, investor's money up to Rs. 1 lakh in deposits with co-operative banks is


insured under the deposit insurance scheme, like other nationalized banks.

Therefore, experts suggest depositors spread their investments across banks. For
example, if someone wants to deposit Rs. 2 lakh, he or she can spread it across two to
three cooperative bank.

Another risk is that at times government puts withdrawal limits in case of bank failure.
"At times, the government restricts holders to withdraw over a certain amount and gives
time to such cooperative banks to come back to shape which for customers becomes a
big hassle, "said Mehra.
Commercial banks of interest rate

Many banks currently pay interest rates up to 9.5 per cent on term deposits - or fixed
deposits (FDs) - up to Rs. 1 crore. While major commercial banks pay interest rates in
the range of 4-7.75 per cent to customers on FDs, small finance banks offer those
between 3.5 per cent and 9.5 per cent. On fixed deposits up to Rs. 1 crore, many
lenders - from major commercial banks such as State Bank of India and HDFC Bank to
small finance banks such as Equitas Small Finance Bank and AU Small Finance Bank -
provide slightly better returns to senior citizen customers compared to the general
public.
Here's a comparison of interest rates paid by some
small finance banks and large commercial banks on
Fixed deposits of up to Rs. 1 crore:
SBI

Interest rate with effect from July 30, 2018


Maturity period (term)
General public senior citizen
7 days to 45 days 5.75 6.25
46 days to 179 days 6.25 6.75
180 days to 210 days 6.35 6.85
211 days to less than 1 year 6.4 6.9
1 year to less than 2 year 6.7 7.2
2 years to less than 3 years 6.75 7.25
3 years to less than 5 years 6.8 7.3
5 years and up to 10 years 6.85 7.35
(Source: sbi.co.in)
ICICI Bank

Interest rate with effect from August 14,


Maturity period (term) 2018
General public senior citizen
7 days to 14 days 4 4.5
15 days to 29 days 4.25 4.75
30 days to 45 days 5.5 6
46 days to 60 days 5.75 6.25
61 days to 90 days 6 6.5
91 days to 120 days 6 6.5
121 days to 184 days 6 6.5
185 days to 289 days 6.5 7
290 days to less than 1 year 6.75 7.25
1 year to 389 days 6.75 7.25
390 days to 2 years 7 7.5
2 years 1 day up to 5 years 7.25 7.75
5 years 1 day up to 10 years 7 7.5
5 Years Tax saver FD (Max up
7.25 7.75
to Rs. 1.50 lac)
(Source: icicibank.com)
HDFC Bank

Interest rate with effect from October 6, 2018


Maturity period (term)
General public senior citizen
7 - 14 days 3.50% 4.00%
15 - 29 days 4.25% 4.75%
30 - 45 days 5.75% 6.25%
46 - 60 days 6.25% 6.75%
61 - 90 days 6.25% 6.75%
91 days - 6 months 6.25% 6.75%
6 months 1 day- 6 months 3 days 6.75% 7.25%
6 months 4 days 6.75% 7.25%
6 months 5 days- 9 months 6.75% 7.25%
9 months 1 day- 9 months 3 days 7.00% 7.50%
9 months 4 days 7.00% 7.50%
9 months 5 days - 9 months 15 days 7.00% 7.50%
9 months 16 days 7.00% 7.50%
9 months 17 days <1 year 7.00% 7.50%
1 Year 7.25% 7.75%
1 year 1 day - 1 year 3 days 7.25% 7.75%
1 year 4 days 7.25% 7.75%
1 year 5 days - 1 year 15 days 7.25% 7.75%
1 Year 16 days 7.25% 7.75%
1 year 17 days - 2 Years 7.25% 7.75%
2 years 1 day - 2 years 15 days 7.10% 7.60%
2 Years 16 days 7.10% 7.60%
2 years 17 days - 3 years 7.10% 7.60%
3 years 1 day - 5 years 7.10% 7.60%
5 Years 1 Day - 8 Years 6.00% 6.50%
8 Years 1 Day - 10 Years 6.00% 6.50%
(Source: hdfcbank.com)
Equitas Small Finance Bank

Maturity period (term) Interest rate with effect from July 5, 2018
7 - 14 days 5.00%
15 - 29 days 5.50%
30 - 45 days 6.00%
46 - 62 days 6.25%
63 - 90 days 6.25%
91 - 120 days 6.50%
121 - 180 days 6.50%
181 - 210 days 6.75%
211 - 270 days 6.75%
271 - 364 days 7.50%
1 year to 18 months 8.00%
18 months 1 day to 2 years 7.75%
2 years 1 day to 3 years 7.75%
3 years 1 day to 4 years 7.00%
4 years 1 day to 5 years 7.00%
5 years 1 day to 10 years 7.00%
(Source: equitasbank.com)
AU Small Finance Bank

Maturity period (term) Interest rate with effect from October 10, 2018
General senior citizen
7 Days to 1 Month 15 Days 5.50% 6.00%
1 Month 16 Days to 3 Months 6.75% 7.25%
3 Months 1 Day to 6 Months 6.90% 7.40%
6 Months 1 Day to 13 Months 7.00% 7.50%
13 Months 1 Day to 18 Months 8.25% 8.75%
18 Months 1 Day to 24 Months 8.50% 9.00%
24 Months 1 Day to 36 Months 7.75% 8.25%
36 Months 1 Day to 45 Months 7.75% 8.25%
45 Months 1 Day to 60 Months 8.00% 8.50%
60 Months 1 Day to 120 Months 7.25% 7.75%
(Source: aubank.in)
Suryoday Bank

Interest rate with effect from September 29,


Maturity period (term)
2018
General senior citizen
7 days to 14 days 4.00% 4.50%
15 days to 45 days 4.00% 4.50%
46 days to 90 days 5.00% 5.50%
91 days to 180 days 5.50% 6.00%
181 days to 240 days 7.50% 8.00%
241 days to less than 1 year 7.75% 8.25%
1 Year to 2 Years 8.50% 9.00%
Above 2 Years to 3 Years 8.75% 9.25%
950 days * 9.00% 9.50%
Above 3 years to less than 5
8.00% 8.50%
Years
5 Years 8.25% 8.75%
Above 5 Years to 10 Years 7.25% 7.75%
Source: suryodaybank.com)
Jana Small Finance Bank

Maturity period (term) Interest rate with effect from October 17, 2018
7 days to 45 days 6.00%
46 days to 60 days 6.50%
61 days to 180 days 7.00%
181 days to 365 days 8.00%
More than 1 year up to 2 years 8.25%
More than 2 years up to 3 years 8.50%
More than 3 years up to 5 years 8.00%
More than 5 years up to 10 years 7.00%
(Source: janabank.com)
Fincare Small Finance Bank

Maturity period (term) interest rate


General senior citizen
7 days to 45 days 4.00% 4.50%
46 days to 90 days 4.00% 4.50%
91 days to 180 days 6.00% 6.50%
181 days to 364 days 7.00% 7.50%
12 months to 15 months 8.00% 8.50%
15 months 1 day to 18 months 8.25% 8.75%
18 months 1 day to 21 months 8.50% 9.00%
21 months 1 day to 24 months 8.75% 9.25%
24 months 1 day to 36 months 9.00% 9.50%
3 years 1 day to 5 years 8.00% 8.50%
5 years 1 day to 7 years 7% 7.50%
(Source: fincarebank.com)
ESAF Small Finance Bank

Maturity period (term) Interest rate with effect from April 1, 2018
General senior citizen
7-14 days 5.75% 6.25%
15 - 59 days 5.75% 6.25%
60 - 90 days 6.50% 7.00%
91 - 179 days 6.75% 7.25%
180 - 363 days 7.50% 8.00%
364 days 5.60% 6.10%
365 - 727 days 8.75% 9.25%
728 days 6.80% 7.30%
729 - 1091 days 8.00% 8.50%
1092 days 5.66% 6.16%
1093 - 1819 days 7.00% 7.50%
1820 days 5.65% 6.15%
1821 - 3652 days 7.00% 7.50%
(Source: esafbank.com)
Utkarsh Small Finance Bank

Maturity period (term) Interest rate with effect from September 27, 2018
General senior citizen
7 days to 15 days 3.50% 4.00%
16 Days to 28 Days 3.50% 4.00%
29 Days to 45 Days 4.00% 4.50%
46 Days to 90 Days 4.50% 5.00%
91 Days to 120 Days 5.00% 5.50%
121 Days to 179 Days 5.50% 6.00%
180 Days to 210 Days 6.00% 6.50%
211 days to 270 days 7.00% 7.50%
271 days to less than 1 year 7.50% 8.00%
1 Year to 455 Days 8.50% 9.00%
456 Days to less than 2 years 9.00% 9.50%
2 Years to less than 3 Years 7.85% 8.35%
3 Years to less than 5 Years 7.00% 7.50%
5 Years 8.00% 8.50%
More than 5 Years to 10 Years 7.00% 7.50%
(Source: utkarsh.bank)
Therefore, small finance banks pay higher interest rates on FDs across several
maturities compared to their larger counterparts.