South based private sec tor lender, City Union Bank is offering highest interest rate on special deposit scheme for 500 days, when all other banks are slicing the interest rates on fixed deposit schemes post the repo rate cut by the RBI.
The interest would be compounded quarterly. Most of the other banks offer 9 per cent or less under their 1-2 year FD schemes. The minimum amount one need to deposit under this scheme is Rs 5,000. Interest is paid on a quarterly basis. One can opt for a monthly pay-out too.
Similar to other FDs, one can also avail loan on this scheme. The interest on the FD loan may be 2 percentage points higher than the deposit interest rates. One can opt for pre-close of their fixed deposit; the bank also offers online FD transaction facility for existing customers.
The tax treatment under this scheme is comparable to other FDs. Interest income beyond Rs 10,000 will attract a TDS of 10 per cent if one fail to provide a 15G/15H declaration stating that their interest income is within the exemption limits.