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Small finance banks (SFBs) have become popular for providing better interest rates on deposits than other public and private sector banks. SFBs are regulated by the RBI and have DICGC (Deposit Insurance and Credit Guarantee) cover, which makes deposits up to ₹5 lakh secure.
In this space, Suryoday Small Finance Bank offers attractive interest rates compared to public sector banks, private banks, and other SFBs.
What is it offering?
Suryoday SFB offers an interest rate of 8.6 per cent to depositors below the age of 60 years for a tenure of 2 to 3 years, and an additional 50 basis points to senior citizens i.e., depositors above the age of 60 years. This is the highest rate offered by it across tenures and compares well with that offered by other SFBs, public sector banks, private banks and also some NBFCs. The minimum deposit required is ₹1,000 and in multiples of ₹1 thereafter.
Prominent SFBs such as Ujjivan Small Finance Bank, Equitas Small Finance Bank and AU Small Finance Bank offer 7.75 per cent, 8.25 per cent and 8 per cent, respectively, for two-to-three-year tenures, with seniors getting 25 to 50 basis points higher. Similarly, public sector banks and private banks offer 6.5 per cent to 7.05 per cent, and 6.5 per cent to 7.75 per cent per annum, respectively, for a two-to-three-year tenure.
In the last one to one-and-a-half years, RBI has hiked the repo rate by nearly 250 basis points, which has made these FDs attractive. Though interest rates may not come down soon, it looks like we are at the top of the interest rate cycle now, and it may be wise to park a portion of your surplus in these deposits.
In order to start a deposit with Suryoday, the depositor needs to visit the bank branch or contact the toll-free number in its website. The bank does not accept online deposits, but allows standalone FDs i.e., FDs without having a savings account with the bank.
Pros and Cons
Small Finance Banks are covered under the RBI’s DICGC scheme; therefore, deposit of up to ₹5 lakh are secured. The bank also offers a quarterly and monthly pay-out in line with the depositor’s needs, besides doorstep banking, which is available to both senior citizens and regular depositors.
However, it charges a penalty of 1 per cent for premature withdrawal of deposits, the only exception being in the case of cumulative deposits booked for a period of one year. The bank has a dominant presence in Maharashtra (166 branches) and Tamil Nadu (117 branches), followed by Odisha (103 branches) and Karnataka (79 branches).
Financials
As of March 31, 2023, it had a customer base of 23.1 lakh and AUM of ₹6,000 crore. Its Net NPAs declined to 1.5 per cent in FY 23 from 6 per cent in FY22, and gross NPAs to 3.1 per cent (11.8 per cent). Net interest income for FY23 stood at ₹746.6 crore, which is 27.8 per cent higher YoY. The net interest margin was 9.5 per cent for FY23, against 8.6 per cent for FY22.
Its CASA deposits in March 2023 were at ₹884.1 crore, against ₹662.6 crore in December 2022. The cost of funds improved to 6.7 per cent in FY23, against 7 per cent in FY22. As of March 31, 2022, total CRAR (Capital to Risk Weighted Assets Ratio) stood at 33.7 per cent, Tier-I capital at 30.8 per cent, and Tier-II capital at 2.9 per cent.
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