Ajinkya-When we say emergency fund, then our priority must be liquidity than earning from this cash. Hence, Ideally I suggest to keep 1/3 in your savings account, 1/3 in eFDs and another 1/3 in Liquid Funds. However, I personally love to put it in eFDs, because of the highest liquidity than liquid mutual funds. I split the eFD equal to my monthly expenses. So that in case of emergency no need to liquidate whole FD but the actual need.