Think twice before making deposits in lesser-known banks

- Antenna - Vivek Mehta

- Cash-current account with interest rate of only 3%, savings account deposits as high as 45% with co-operative banks

Temptation is bad. Equally bad is the temptation to earn high interest. Due to this, it can lead to giving or taking. There is a danger of losing capital in the temptation to earn more interest. After the Reserve Bank hiked interest rates, nationalized and private banks have also hiked their fixed deposit interest rates to around seven to seven and a half percent. However, co-operative banks did not tend to give additional interest initially.

Giving the reason for this, a senior official of a cooperative bank says that the number of small depositors with cooperative banks is increasing. As a result, the amount of deposits in their bank's current account and savings account is as high as 40 to 45 percent.

In technical parlance these deposits are known as CASA (Current Account-Saving Account) deposits. Only around 3 percent interest has to be paid on it. High interest rate deposits with co-operative banks are only around 50 to 55 percent. The sum comes down to the total outstanding value of the deposits held by him.

Even in co-operative banks, when interest rates were the same as those of nationalized and private banks, people used to deposit deposits in them. But after the nationalized banks and private banks raised the interest rates to seven to seven and a half percent, some cooperative banks began to divert their maturing deposits to other banks without increasing the interest rates, and the banking staff also started complaining. As a result some co-operative banks have also started the exercise of taking their interest rates higher.

Small finance banks have started taking the most advantage of the interest rate hike. They are ready to give nine to nine and a half percent interest rate to the depositors. There is a reason for that. They want to increase their volume. To increase their work. For this, they are trying to attract more deposits to their banks. Small finance banks have also started offering interest rates as high as nine percent or more.

As a result deposits of private banks, nationalized banks are decreasing. But if this small finance bank is not well-known, it is being told vigorously on the social media platform to think five times before depositing in it. Expressing the fear of sinking money, they are advising to be careful before depositing money in small finance banks.

This advice is being given out of fear of sinking money. If the depositors want to earn more interest and also keep their money safe, they should deposit between three to four and a half lakhs in small finance banks. By doing so, their deposits will be insured up to Rs. A cover of up to 5 lakhs can be availed.

This will open the way to get more interest and the deposits will also be safe. Even if the bank goes bankrupt, they will get their Rs. 4.50 lakhs to 5 lakhs will be refunded. Yes, this six-twelve-month interest will be forfeited.

If it takes longer to get the money back, they may end up incurring huge interest losses. In this situation, without getting too tempted, it would be better to keep deposits in good and well-known banks and earn interest income.