First, your benchmark: Your SB account gives you 4%.
Now, consider a fixed deposit. Banks offer you those, at rates that depend on the term. The 1-year FD today gets you between 9 and 9.5%. While the term is locked in, you can get an early withdrawal - if you exit the 1 year FD within, say, 60 days, they'll give you the interest rate that applied for 60 days when you started the FD (with some banks reducing a further 1% from that rate as a penalty). Still, your principal is returned in full (the penalty is only on the interest).
Negatives: Taxes. The interest paid is fully taxed, and worse, taxes are deducted at source (TDS = 10% of the interest), so even if you don't use the interest it's counted as income and taxed.
Next, consider a short term debt mutual fund. These are, for terms of more than a month, just as low on risk as a bank fixed deposit. There is no equity, and these funds put money back into bank wholesale deposits which give an even better rate. You can withdraw any time you want (it takes only a day to get money back into your account). Usually early withdrawal penalties will apply for about 30 days, but if you have a longer horizon that shouldn't be a problem.
The good part: No TDS, and the interest received is not considered "income", until you withdraw. So if you get 9% and don't exit, you pay no taxes, and the compounding of the full 9% happens. It's an alternative to a Savings Bank account - just keep putting your money in, and take it out when you need it.
The bad part: There is no guarantee that you'll get 9%; with market prices being volatile, the yields could drop to 6%. So you have to track this carefully (currently, yields have been between 8 and 9% for the last year)
A more detailed piece on this at: http://capitalmind.in/2011/01/at-yahoo-reconsider-that-fixed-deposit/
Choosing such a fund: I wrote an article about it at http://capitalmind.in/2011/01/how-to-find-good-short-term-debt-funds/ - I still continue to be invested in those funds (and they're giving me about 9%)
The above are limited risk options. For a long term view I would consider equity investments (buying stocks or equity mutual funds) from reputed funds. If you're risk averse consider buying a "balanced" fund like HDFC Prudence, where they invest part in fixed income markets and part in stocks.
Lastly, don't look at the recent past only. The Sensex has returned over 18% in the last ten years, but the ten years before that were horrible. Equity markets are risky, but can give you fantastic returns as well.