Back'Investors are using FDs for diversification as markets are at all-time high'
'We thought there's a gap between our one- and three-year fixed deposit. We, therefore, launched a 700-day fixed deposit (branded as Health Plus) with special benefits and 6.70% interest rate'
PremiumBanks' fixed deposit growth has remained healthy despite low interest rates. Praveen Kutty, head retail and SME banking at DCB Bank, in an interview with Mint, spoke about the branding of fixed deposits and reasons for offering free benefits on them. Edited excerpts:
Despite low rates in 2020, what were the reasons behind healthy growth in fixed deposits for the industry?
FDs have always been a critical investment avenue for Indians. During the pandemic, many well-off customers didn't have avenues to spend. The accumulated funds found their way to fixed deposits. Another reason is the equity markets. Many investors are looking at fixed deposits (FDs) for diversification as markets are at their all-time high.
Why do you offer a life cover only with the three-year fixed deposit?
The product, Suraksha deposit, is offered in partnership with Aditya Birla Sun Life Insurance. We offer 6.75% interest rate for three years and free life insurance without any medical check-up. The cover equals the FD amount (maximum of ₹50 lakh) and is available for customers below 55.
It has restrictions on age and tenure because there's a cost attached to it. If we give it to all customers, then we have to bear a much higher cost. Operationally, too, it would have been a nightmare to provide it for all maturities. Suraksha deposit helps us in customer acquisition and to introduce them to the bank.
If the bank has to give the insurance for FDs with higher maturities, the cost goes up significantly. Anything less than three is too low. We, therefore, chose three-year as the benchmark.
Is the 700-day deposit higher rates another product for customer acquisition?
The deposit is specifically for those who want to park their money without any goals. Due to the benefits, customers keep renewing the FD, and the money stays with us for the long term. Customers test our services with this FD. They increase the FD amount if they like us.
We thought there's a gap between our one- and three-year fixed deposit. We, therefore, launched a 700-day fixed deposit (branded as Health Plus) with special benefits and 6.70% interest rate.
It offers free health-related benefits in partnership with ICICI Lombard General Insurance, depending on the amount. For ₹10,000, the customer gets four tele-consultations with doctors. Customers depositing between ₹1 lakh and 3 lakh get eight tele-consultations, two face-to-face appointments. The benefits increase with the amount. The top-tier is ₹25 lakh FD where the depositor gets 10 tele-consultations, 10 face-to-face appointments and free medicines worth ₹3,000.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
