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Understanding Green Deposits: How They Are Better Than Regular FDs?
Reviewed by: Fibe Research Team
- Published on: 4 Dec 2024
Reviewed by: Fibe Research Team
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.
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:
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.
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 | ||
| 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. |
Here are all the reasons why investing in green deposits is smart.
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.
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.
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.
The eligibility criteria for this type of FD are lenient and straightforward. As such, the following entities can apply for it:
There may be certain terms applied to different entities as per the issuer. Hence, it is best to check the criteria before applying.
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.
Similar to regular fixed deposits, they are a secure investment option with very low risk.
Banks and financial institutions allow individuals to invest in green deposits.
