Chennai: In a bid to attract new clients, small finance banks like Airtel Payment Bank, Equitas, Fincare and Suryoday are offering better rates than traditional lenders on fixed deposits and savings accounts. With FD rates between 8-9%, the SFBs are also trying to cut ice with pensioners with deposit rates upwards of 9.2-9.5% for senior citizens. Savings account holders could also see some benefits in parking their funds with SFBs as the interest fetched is as high as 7%. This compares to State Bank of India, offer of 4%. “For savings account balances up to Rs 1 lakh, we are offering 6% interest rate. And for balances higher than Rs 1 lakh they can earn a higher interest than 7%,” says Rajeev Yadav, MD & CEO, Fincare SFB.
At Equitas SFB, whose total lending portfolio is around Rs 7,200 crore, offering attractive rates is a means of garnering more customers among its target section of lower-middle income groups. “Our deposits – both FD plus savings — now account for more than Rs 2,000 crore since our launch in September 2016. We are seeing good growth in deposits; our offering for senior citizens is 50 basis points higher than our normal FD rate of 7.25% for two-three year deposits. Our savings account rates of 6% is also higher than what you would get at most banks,” said P N Vasudevan, founder, Equitas SFB.
Each of these banks are also running different campaigns to capture market interest – for Equitas its “fun banking,” Suryoday is going with “convenience banking” while Fincare’s slogan is “Ruban banking” (as its target segment is both rural and urban). “See a vegetable seller or grocery store owner is a one-man show. He doesn’t have employees or underlings to man the shop, while he deposits money in the bank. So for his convenience, the bank is doing door-to-door pickup for deposits. And we offer interest rates as high as 9-9.75% for a tenure of one-two years. For savings account deposits of up to Rs 1 lakh, the interest rate would be 7.25% and for deposits above Rs 10 lakh, the interest could be higher,” says CEO R Bhaskar Babu Suryoday Small Finance Bank Ltd. “We also realise many of our clients are women entrepreneuers, who run tailoring shops, eateries or sell candles, pickles from the confines of their home. So for them our bank representative will go home to pick up the deposits,” he adds.
SFBs’ interest rates of 8-9.75% for senior citizens is one of the highest in the industry. On average, public-sector banks like SBI, PNB, Bank of Baroda offer between 7-7.5% interest rate for senior citizens, who are depositing money for a period of one-two years.
Fincare SFB, which recently launched operations is also offering very high rates. “For regular customers, the bank is offering interest rates of up to 9% for term deposits, amongst the highest rates in the small finance sector. Senior citizens will earn an additional 0.5%,” says Fincare’s CEO Yadav.