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POSTED BY ON February 26, 2012 9:27 am COMMENTS (4)
Currently LVB (Lakshmi Vilas Bank) is offering 10.5% p.a.(10.75% for Senior Citizens) for a deposit of 1-2 years which is one of the highest offered by PSU/Pvt. banks (excluding Co-operative banks). I have a branch near my residence-hence accessibility may not be a problem.
My queries :
1) How safe is LVB? I am aware that it is an old bank but does anyone have first-hand experience of dealing with it? (Notwithstanding the fact that deposits in banks are insured upto Rs.1 Lakh per depositor, receiving such claims is a time-consuming exercise and would prefer a bank which does not run such a risk)
2) If LVB is not advisable,which other bank would you recommend and why?
3) For placing an F.D.,does the bank insist on opening an SB A/c with it?
Many thanks for your inputs and help.
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Lakshmi Vilas bank is like any other private bank. If i can think of investing in ICICI, i dont mind investing 1 lakh in LVB.One Lakh is insured in both the cases.
When investing in FD, always keep your eyes open for opportunities. For now LVB is paying highest rated of interes for Fixed Deposit. CSB is another bank that is offering 10.75% for 991 days.
Dhanalakshmi bank is offering 10.6% for 5 years tax saving FD.
Note all above interest rates are for senior citizen.
I would personally recommend look at the difference interest amount . how much difference will be there in 9.5% as suggested by ashal for SBI and LV bank . If its just 1 yr deposits , I would say why to think so hard or so much for couple of hundreds and keep worrying about it .
thats my personal view .
Hi Sundaram,
I would not doubt the credibility of a bank, specially in India. They are too heavily regulated to go bust and if they are on the brink of being bust, RBI stands out to protect the bank.
It is very important though to spread the credit risk of your FDs across different banks / financial institutions. Avoid excessive exposure of your FD on a single bank. While excessive word is subjective. For a rich person even 10 lacs is not an excessive amount, while for a lesser rich person, 50K is an excessive amount.
Ashal has mentioned a very vital point of going ahead with a large duration FD as it would lock in high interest rate for a long duration and give consistent return for 10 years. Have a read of http://insight.banyanfa.com/?p=103 which shall give you an insight of things to avoid / take into consideration while opening a FD.
Regards
BFA
Dear Sundaram A, instead of going such high rate for next 1-2 years, I w’d prefer to invest in SBI’s 10Y bank FD @ 9.25% (ordinary) & 9.75% (Sr. citizen). After the 1-2Y period, when thif LVB FD ‘ll be due for renewal, the interest rates ‘ll not be so high.
Thanks
Ashal