DCB Bank has relaunched DCB Suraksha fixed deposit this festive season for investors looking for a traditional savings product with a provision of small insurance cover.

Here we discuss the salient features of this product.

DCB Suraksha: key features

DCB Suraksha provides the benefit of life insurance cover along with fixed deposit.

The tenure of fixed deposit is three-years and it offers an interest rate of 7.10 per cent.

It comes with an additional benefit of life insurance cover that is equal to the fixed deposit (up to a maximum of ₹10 lakh) and limited to the FD period of three years. The insurance cover is free of cost for the depositor and is valid only for the age group of 18-55 years.

This product is also available to NRIs in both NRE and NRO categories and the FD can be booked in foreign currencies such as Canadian dollar, EURO, GBP, Australian dollar or USD.

Currently, Small Finance Banks are offering 7.5-7.75 per cent interest on FDs for 3-year tenure, higher than DCB Suraksha.

However, interest rates offered by majority of private sector banks (except IDFC First Bank) are 35-135 bps lower than what DCB Suraksha is offering for the 3-year tenue. IDFC First Bank is offering 7.25 per cent interest rate, while interest rates of public sector banks are a notch lower (5.3 - 6.5 per cent).

Should you opt for this product

Although the product combines the features of a fixed deposit and an insurance policy, the insurance cover is limited to 36 months.

The tenure is short and may not necessarily serve the purpose of security for life.

DCB Bank hiked interest rates on regular FDs on October 17, 2022 by offering 7.5 interest rate for a three-year period for normal depositors and eight per cent interest rate for senior citizens.

The bank is offering similar interest rates for the 700-day to 36-month period. Non-Resident External (NRE) and Non-Resident Ordinary deposits can fetch 7.5 percent interest for the tenure of 700-day to 36-month period.

Our verdict

There are no freebies in the financial world.

The premium for the “free” life insurance cover is recovered from the depositor by offering low interest rate. The only advantage from a combo product is single-window convenience, which is not significant for this product due to its limited period of three-years.

Therefore, investors may be better off opting for normal fixed deposits rather than DCB Suraksha as they would give a higher rate of interest. Also, look for a suitable insurance product with a large enough cover.

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