Emergency Fund Account with High interest rate on SB & FD

[kjs]

Hello Members,

I am looking to open emergency fund account with high interest rate on saving account and FD.

I have shortlisted 3
- AU Small Fin
- RBL Bank
- IndusInd Bank.

Preference: 0 balance.

Note : I will keep adding all extra fund in this account every month and do FDs and some idle amount in account. I have
ICICI salary account 0 bal by default and
hdfc 0 bal which i use for investment & Credit card bill payment.
BOB for UPI Transactions.

Also there should be an option for auto Rewenal for FD'S.

I am open to suggestions if better options apart from mentioned above 3

 

[Lobogris]

Go for proper banks like Induisnd

Ignore all small finance banks as of now
Chances of them failing is getting pretty high
Even if they are insured for 5L its not worth the hassle

Chances of failure are slim. On what basis are you making this claim? Don't spread needless panic.

 

[Lobogris]

Hi,
For Emergency Fund, one can keep the amount in various debt MF. returns would be in the range of 6-8%. Liquidity issue is there as one would receive fund on T+1 day. Hence a combination of MFs & FDs is a better choice.

What is the benefit of this vs. getting 7.25% on savings itself?

 

[Santhosh]

My opinion:

Requirements:
1. Emergency funds must be easily accessible
2. Emergency funds must be "safe".

RBL Bank has higher rates perhaps because there was negative news about it in the recent past, so I am not sure it meets Requirement # 2 for a long term "deposit and forget about it" approach. See for example, this article.

IndusInd Bank has good rates but the quality and reliability of internet banking is quite low. I am not sure it meets Requirement # 1.
Same is the case with SBM Bank India (pathetic quality of internet banking, but high rates)

AU Small Finance Bank seems to have decent internet banking, but I am not sure it meets Requirement # 2. Also the number of branches is not that high, so even accessibility is not fantastic if we also consider physical branches.

My suggestion is to not chase returns for your emergency funds. Unluckily, and I wish that does not happen, but if there is an emergency in which you are the victim and are not able to perform financial transactions, the funds must be available easily. Go to the nearest branch of ICICI / HDFC / SBI / Axis and open the account there.

Axis is notorious for fees / deductions from account balance, but it also has this feature where if the FD tenure is more than 2 years, if you prematurely break FD after 15 months, no penalty is charged. That could be useful for this use. Axis rates are also usually higher than ICICI / HDFC / SBI.

ICICI, HDFC, SBI and also probably Axis also offer a facility of auto sweep-in and sweep-out where FD is automatically created if savings account balance crosses a threshold, and automatically broken (closed) if withdrawal / transfer of an amount higher than the savings account balance is performed. Very convenient for emergency use.

but if there is an emergency in which you are the victim means health emergency?
Emergency fund is for health?
Can you please help me on this to understand in detail?

 

[Ankit9792]

Read some twitter comments related to IndusInd , once ur no is registered in their system you are flooded with so many spam calls almost on daily basis .Never issue with my current ICICI & Hdfc ..

nahi hota bhai mai 3 Saal Se Indusind Bank use kar raha Hu 10 Lakh Ki fd ki koi spam call nhi aata mujhe

Agar Credit card Liye ho tabhi daily spam message call karte hai

 

[Lobogris]

nahi hota bhai mai 3 Saal Se Indusind Bank use kar raha Hu 10 Lakh Ki fd ki koi spam call nhi aata mujhe

Agar Credit card Liye ho tabhi daily spam message call karte hai

Unfortunately, it is true. I get several calls per day from them for personal loans. I have blocked over 100 numbers but they keep calling. I have requested the BM and the callers to remove me from the list but to no avail. They call around 6x per day for about a week and then it stops for a week or two and restarts.