Understanding Green Deposits: How They Are Better Than Regular FDs?

Updated on: 4 Dec 2024

As our lives get busier than ever, it becomes difficult to think about the planet and take steps to promote sustainability. This is where green deposits can provide you with a solution that is also doubly beneficial – the ability to earn high returns while ensuring your funds are invested in causes that further the environment and reduce climate risks. Read on to learn how a green fixed deposit works, its benefits, the interest rates offered and more.

What is a Green Deposit?

It is a type of fixed deposit similar to any other type of fixed deposit in terms of investment. Its distinguishing factor is that the funds from green deposits are redirected towards eco-friendly projects such as:

Reducing pollution
Sustainable farming practices
Generating clean energy
Reducing the carbon footprint
Wastewater management
Clean air projects
Green construction

How Does it Work?

These deposits aren’t very different from regular fixed deposits that you can invest in with banks and other financial institutions. The key difference is that your investment in green deposits is directed towards projects that support sustainability and environmentally-friendly businesses.

Green Deposit Interest Rate

The following table includes the latest interest rates for green fixed deposits that you can choose from.

Banks	Interest Rate for Regular Citizen		Interest Rate for Senior Citizen
Banks	Minimum	Maximum	Minimum	Maximum
AU Small Finance	7.25% p.a.	8.00% p.a.	7.75% p.a.	8.50% p.a.
Bank of Baroda	6.45% p.a.	7.10% p.a.	7.30% p.a.	7.60% p.a.
Canara Bank	6.65% p.a.	6.70% p.a.	7.15% p.a.	7.20% p.a.
Central Bank of India	5.70% p.a.	5.80% p.a.	6.20% p.a.	6.30% p.a.
HDFC Bank	6.95% p.a.	7.55% p.a.	7.20% p.a.	7.80% p.a.
IDFC FIRST Bank	6.80% p.a.	6.80% p.a.	7.30% p.a.	7.30% p.a.
State Bank of India	6.40% p.a.	6.65% p.a.	7.15% p.a.	7.40% p.a.
South Indian Bank	6.50% p.a.	6.50% p.a.	7.00% p.a.	7.00% p.a.
Yes Bank	7.50% p.a.	7.50% p.a.	8.00% p.a.	8.00% p.a.

Advantages of Opting for Green Deposit

Here are all the reasons why investing in green deposits is smart.

Financial Growth

It offers lucrative interest rates that can help you meet your monetary goals. You can invest as per the financial institution’s minimum investment amount and plan out your returns based on the interest rate.

Environmental Impact

While it is good for your financial health, this option also works in favour of the environment. It helps finance all eco-friendly projects that can help the nation’s development while being cognizant of the planet as a whole.

Secure Investment

Since it works like any other bank FD, it is a good option for risk-averse investors. This is because your investment is not subject to market fluctuations. This way, you can get predictable and guaranteed returns, which are higher than returns offered by savings accounts.

Inclusive

The eligibility criteria for this type of FD are lenient and straightforward. As such, the following entities can apply for it:

Individuals
Hindu Undivided Family
Sole proprietorships
Society
Clubs
Non-profit organisation
Corporate entities

There may be certain terms applied to different entities as per the issuer. Hence, it is best to check the criteria before applying.

Benefits For Senior Citizens

Like with other FDs, senior citizens can enjoy additional interest rates of 0.25% to 0.50% or more.

Now that you know all the perks you can enjoy with this kind of term deposit, it’s best to understand its limitations as well. Firstly, it may come with restricted tenures, reducing its flexibility as an investment option. In addition, such deposits usually do not offer tax benefits. So, compare all your options and analyse your financial needs before investing.