The primary goal for emergency funds is safety and accessibility. However, if you're looking for better returns while maintaining a reasonable level of liquidity, here are some options to consider:

High-Interest Savings Accounts: Some banks offer savings accounts with higher interest rates, especially digital or online banks. These rates may be more competitive than traditional banks.

Fixed Deposits (FDs): Fixed deposits in Indian banks can offer higher interest rates compared to regular savings accounts. Choose shorter tenures for better liquidity or consider creating a ladder of fixed deposits with staggered maturity dates.

Liquid Mutual Funds: Liquid funds invest in short-term money market instruments, providing a relatively higher return compared to traditional savings accounts. They offer reasonable liquidity, allowing you to redeem your investment quickly.

Sweep-In Fixed Deposits: Some banks provide a sweep-in facility where surplus funds in your savings account are automatically transferred to a fixed deposit, earning higher interest. When you need the funds, they are automatically swept back into your account.

Short-Term Debt Funds: Short-term debt mutual funds invest in fixed-income securities with shorter maturities. While they carry a bit more risk than traditional savings accounts, they can offer higher returns. Be aware of market fluctuations and choose funds with a solid track record.

Government Savings Schemes: Options like the Public Provident Fund (PPF), National Savings Certificate (NSC), and Senior Citizens Savings Scheme (SCSS) are low-risk options provided by the government. They offer attractive interest rates, but some have longer lock-in periods.

Bank Flexi-Deposits: Some banks offer flexible or flexi-deposit schemes where you can withdraw a part of the fixed deposit without breaking the entire deposit. It provides a balance between returns and liquidity.

Before making any decisions, it's crucial to assess your risk tolerance, time horizon, and the specific liquidity needs of your emergency fund. Diversification and a combination of the above options can be a prudent strategy to balance returns and accessibility. Consult with a financial advisor to tailor your emergency fund strategy to your specific financial situation and goals.

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