Small finance banks may be niche banks, catering to a small section of customers, but the interest rates that they offer on savings bank accounts are much higher than larger peers. Consider this: large banks like State Bank of India (SBI), HDFC Bank and ICICI Bank offer between 3.5 per cent and 4 per cent on savings account deposits. But small finance banks like Jana Small Finance Bank, ESAF Small Finance Bank and North East Small Finance Bank offer up to 7 per cent on savings account deposits.
Why small finance banks offer higher interest rates than mainstream banks:
Small finance banks offer high interest rates on recurring deposits and fixed deposits as well. Their RD and FD interest rates are much higher than banks like SBI and other peers.
Small finance banks are relatively new as compared to the mainstream banks. Thus, with high interest rates they try to woo maximum customers, say experts. They also offer door-step services for the convenience of their customers.