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With the recent volatility in the stock market, fixed deposits (FDs) are once again in the spotlight. These low risk investments are especially favored by senior citizens, who rely on them for a steady post retirement income.
Reserve Bank of India or RBI recently cut the repo rate by 0.25%, shifting investor focus to FD interest rates, as banks are expected to follow suit and revise their rates. In February 2025 alone, six banks updated their FD rates for both senior citizens and general investors.
Meanwhile benchmark indices SENSEX and NIFTY50 have each fallen over 10% from its peak, pushing many investors toward safer investment options like FDs.
While stock market fluctuations are inevitable, FDs provide stability and assured returns. Banks and NBFCs offer FDs with tenures ranging from six months to ten years, with interest rates varying based on the deposit amount and duration. And investors have the flexibility to withdraw funds before maturity in case of emergencies, although premature withdrawals may attract penalties.
Benefits for Senior Citizens on FD
Senior citizens (aged 60 and above) receive an extra 0.5% interest on FDs, making them an attractive choice for those seeking higher returns. For instance, if a bank offers 7% interest on a regular FD, a senior citizen would earn 7.5% for the same tenure.
And deposits up to ₹5 lakh including interest are secured under the RBI’s deposit insurance scheme, ensuring depositors get their money back even if a bank faces financial trouble. Interest earned on FDs is taxable but Budget 2025 has increased the TDS threshold from ₹40,000 to ₹50,000 for general citizens and up to ₹1 lakh for senior citizens allowing for better post tax returns.
With market uncertainties on the rise, fixed deposits continue to be a reliable and secure investment choice especially for those looking to safeguard their savings.
In the below table you can find which bank has the highest interest rate for FD.
FD Rates Offered by Public Sector Banks
| Bank | Highest slab (% p.a.) | 1Yr Tenure (% p.a.) | 3Yr Tenure (% p.a.) | 5Yr Tenure (% p.a.) |
|---|---|---|---|---|
|
Central Bank of India |
7.5 |
6.85
|
7 |
6.75
|
|
Bank of Maharashtra |
7.45 |
6.75
|
6.5
|
6.5
|
|
Punjab & Sind Bank |
7.45 |
6.3 |
6 |
6 |
|
Canara Bank |
7.4 |
6.85 |
7.4 |
6.7 |
|
Bank of Baroda |
7.3 |
6.85 |
7.15 |
6.8 |
|
Bank of India |
7.3 |
6.8 |
6.5 |
6 |
|
Indian Bank |
7.3 |
6.1 |
6.25 |
6.25 |
|
Indian Overseas Bank |
7.3 |
7.1 |
6.5 |
6.5 |
|
UCO Bank |
7.3 |
6.5
|
6.3
|
6.2
|
|
Union Bank of India |
7.3 |
6.8
|
6.7
|
6.5
|
|
Punjab National Bank |
7.25 |
6.8
|
7 |
6.5 |
|
State Bank of India |
7.25 |
6.8
|
6.75
|
6.5 |
FD rates as of 20 February 2025
FD Rates Offered by Private Sector Banks
| Bank | Highest slab (% p.a.) | 1Yr Tenure (% p.a.) | 3Yr Tenure (% p.a.) | 5Yr Tenure (% p.a.) |
|---|---|---|---|---|
|
SBM Bank India |
8.25 |
7.05 |
7.3 |
7.75
|
|
Bandhan Bank |
8.05 |
8.05 |
7.25 |
5.85
|
|
DCB Bank |
8.05 |
7.1 |
7.5 |
7.4 |
|
CSB Bank |
8 |
5 |
5.75 |
5.75 |
|
RBL Bank |
8 |
7.5 |
7.5 |
7.1 |
|
Yes Bank |
8 |
7.75 |
7.25 |
7.25 |
|
IndusInd Bank |
7.99 |
7.75 |
7.25 |
7.25 |
|
IDFC First Bank |
7.9 |
6.5 |
6.8 |
6.75 |
|
Karur Vysya Bank |
7.6 |
7 |
7 |
7 |
|
Tamilnad Mercantile Bank |
7.6 |
7 |
6.5
|
6.5
|
|
City Union Bank |
7.5 |
7 |
6.5 |
6.25 |
|
DBS Bank |
7.5 |
7 |
6.5
|
6.5 |
|
Federal Bank |
7.5 |
7 |
7.1 |
7.1 |
|
Karnataka Bank |
7.5 |
7.25 |
6.5 |
6.5 |
|
HDFC Bank |
7.4 |
6.6 |
7 |
7 |
|
IDBI Bank |
7.4 |
6.8 |
6.5 |
6.5 |
|
Kotak Mahindra Bank |
7.4 |
7.1 |
7 |
6.2 |
|
South Indian Bank |
7.4 |
6.7 |
6.7 |
6 |
|
Axis Bank |
7.25 |
6.7 |
7.1 |
7 |
|
Dhanlaxmi Bank |
7.25 |
6.75 |
6.5 |
7.25 |
|
ICICI Bank |
7.25 |
6.7 |
7 |
7 |
|
Jammu & Kashmir Bank |
7.25 |
7 |
6.75 |
6.5 |
|
Nainital Bank |
7.05 |
6.7 |
6.25 |
5.75 |
FD rates as of 20 February 2025
FD Rates Offered by Small Finance Banks
| Bank | Highest slab (% p.a.) | 1Yr Tenure (% p.a.) | 3Yr Tenure (% p.a.) | 5Yr Tenure (% p.a.) |
|---|---|---|---|---|
|
North East Small Finance Bank |
9 |
7 |
9 |
8 |
|
Unity Small Finance Bank |
9 |
7.85 |
8.15 |
8.15 |
|
Shivalik Small Finance Bank Limited |
8.8 |
6 |
7.5 |
6.5 |
|
Suryoday Small Finance Bank |
8.6 |
8.25 |
8.25 |
8.6 |
|
Utkarsh Small Finance Bank |
8.5 |
8 |
8.5 |
7.75 |
|
ESAF Small Finance Bank |
8.38 |
6 |
6.75 |
6.25 |
|
Equitas Small Finance Bank |
8.25 |
8.1 |
8 |
7.25 |
|
Jana Small Finance Bank |
8.25 |
8.25 |
8.25 |
8.2 |
|
Ujjivan Small Finance Bank |
8.25 |
8.25 |
7.2 |
7.2 |
|
AU Small Finance Bank |
8.1 |
7.25 |
7.5 |
7.25 |
|
Capital Small Finance Bank Limited |
7.6 |
7.55 |
7.15 |
7.1 |
FD rates as of 20 February 2025
FD Interest Rates – Tax Saving FD
| Bank | General Citizens (% P.A.) | Senior Citizens (% P.A.) |
|---|---|---|
|
Suryoday Small Finance Bank |
8.6 |
9.1 |
|
Jana Small Finance Bank |
8.2 |
8.2 |
|
SBM Bank India |
7.75 |
8.25 |
|
Utkarsh Small Finance Bank |
7.5 |
8.1 |
|
DCB Bank |
7.4 |
7.9 |
|
AU Small Finance Bank |
7.25 |
7.75 |
|
IndusInd Bank |
7.25 |
7.75 |
|
Ujjivan Small Finance Bank |
7.2 |
7.7 |
|
Capital Small Finance Bank Limited |
7.1 |
7.6 |
|
Federal Bank |
7.1 |
7.6 |
|
RBL Bank |
7.1 |
7.6 |
|
Axis Bank |
7 |
7.75 |
|
Bandhan Bank |
7 |
7.5 |
|
HDFC Bank |
7 |
7.5 |
|
ICICI Bank |
7 |
7.5 |
|
Karur Vysya Bank |
7 |
7.4 |
|
Central Bank of India |
6.75 |
7.25 |
|
IDFC First Bank |
6.75 |
7.25 |
|
Bank of Maharastra |
6.5 |
7 |
|
IDBI Bank |
6.5 |
7 |
|
Indian Overseas Bank |
6.5 |
7 |
|
Jammu & Kashmir Bank |
6.5 |
7 |
|
Karnataka Bank |
6.5 |
6.9 |
|
Shivalik Small Finance Bank Limited |
6.5 |
7 |
|
State Bank of India |
6.5 |
7.5 |
|
Tamilnad Mercantile Bank |
6.5 |
7 |
|
Union Bank of India |
6.5 |
7 |
|
Bank of Baroda |
6.50 - 6.80 |
7.40 - 7.50 |
|
Indian Bank |
6.25 |
6.75 |
|
Kotak Mahindra Bank |
6.2 |
6.7 |
|
UCO Bank |
6.2 |
6.7 |
|
Bank of India |
6 |
6.75 (6.90 for super senior citizens) |
|
Punjab & Sind Bank |
6 |
6.5 |
|
South Indian Bank |
6 |
6.5 |
FD rates as of 20 February 2025
FD Interest Rates – Foreign Banks
| Bank | Highest slab (% p.a.) | 1Yr Tenure (% p.a.) | 3Yr Tenure (% p.a.) | 5Yr Tenure (% p.a.) |
|---|---|---|---|---|
|
Deutsche Bank |
8 |
7 |
8 |
7.5 |
|
HSBC Bank |
7.5 |
4 |
7 |
6 |
|
Standard Chartered Bank |
7.5 |
7.5 |
7.1 |
6.75 |
FD rates as of 20 February 2025
How to Open FD Account?
You can open a fixed deposit account either online or offline depending on your convenience. Here’s a step by step guide for both methods:
Opening a Fixed Deposit Online
- Visit the official website of your preferred bank.
- Log in to your existing account or create a new one if required.
- Navigate to the ‘Fixed Deposit’ section.
- Enter the necessary details such as deposit amount, tenure and nominee information.
- Upload the required documents as per the bank’s guidelines.
- Review all the details and submit your application.
- Complete the payment using internet banking or other available options.
- Save the receipt for future reference.
Opening a Fixed Deposit Offline
- Visit the nearest branch of your chosen bank.
- Fill out FD application form with details like deposit amount and tenure.
- Submit the completed form along with the necessary documents.
- Deposit the amount either in cash or via cheque.
- Bank will process your request and issue an FD receipt as confirmation.
Factors To Consider Before Investing in Fixed Deposits
FDs are a popular and secure investment option but before you decide where to invest, there are a few key factors you should keep in mind.
- Deposit Limit: Every bank has a maximum deposit limit for fixed deposits, which determines how much you can invest. Some banks may set a cap on FDs, so it's important to check the limits before making a decision.
- Interest Rates: Interest rate on an FD varies from bank to bank like we mentioned above, depending on factors like financial strength and market conditions. Some banks may offer higher rates, while others provide lower ones due to their size or risk ratings. Comparing interest rates across banks will help you find the best option for maximizing your returns.
- Liquidity: Liquidity refers to how easily you can access your money when needed. Before choosing an FD, check the bank’s withdrawal policies and penalty charges in case you need to break the FD before maturity.
- Tax Benefits: If you’re looking for tax saving options, some fixed deposits like tax saver FDs allow you to claim deductions under Section 80C of the Income Tax Act. However, keep in mind that these come with a lock in period usually five years.
- Tenure: Duration of your FD is important, as it determines how long your money will be locked in and at what interest rate. Fixed deposit tenures can range from a few months to several years, so choose one that aligns with your financial goals.
Frequently Asked Questions
What is the minimum lockin period for a tax saving FD?
Tax saving FDs come with a lock in period of 5 years.
Why should I invest in FD?
FDs provide guaranteed returns, come with a RBI insurance cover of up to ₹5 lakh, offer tax benefits (for tax saving FDs under Section 80C) and can be used as collateral for loans or credit cards.
Who can invest in FD scheme in India?
Resident individuals, companies (both private and public), HUFs, partnership firms, societies, governments and local bodies can all invest in FDs.
What are the minimum and maximum tenure of FD schemes?
FD tenures generally range from as short as 7 days up to 10 years. NBFCs offer terms from 12 to 60 months, while HFCs may provide terms from 12 to 120 months.
How do I choose a fixed deposit?
When choosing FD, consider your need for liquidity, your investment goals and time horizon, current interest rates, payout options and any additional benefits like loan facilities.
How will I receive the FD maturity amount?
For existing customers, the maturity amount is usually credited directly to the linked bank account. Others might receive it as cash (up to a limit), a pay order, a demand draft or through electronic transfers like NEFT/RTGS.
Is the interest earned on a fixed FD?
Yes, interest is taxable. However, tax saving FDs allow for a deduction under 80C, up to ₹1.5 lakh per year.
What is the FD interest rate for senior citizens?
Senior citizens receive an extra interest rate of around 0.50% on top of the standard FD rates offered by most banks.
Is it mandatory to submit a PAN to open an FD?
Yes, you must provide your PAN. If you do not have one, you will need to submit a duly filled Form 60/61 (if you're not a company or a firm).
What is the minimum deposit amount allowed for opening an FD?
Minimum deposit is generally ₹1,000, though some public sector banks may require less and tax saving FDs can be opened with amounts as low as ₹100.
Is it safe to open FD in Small Finance Banks?
Yes, Small Finance Banks are regulated by RBI and offer FD deposits with DICGC insurance coverage of up to ₹5 lakh.
Can depositors get interest on a monthly basis?
Yes, non cumulative FDs allow for monthly interest payouts.
Does premature withdrawal negatively affect fixed deposit earnings?
Yes, withdrawing an FD before maturity usually incurs a penalty of up to 1% on the effective interest rate which reduces your overall earnings.
Happy investing and thank you for reading!
Disclaimer:
This website content is only for educational purposes, not investment advice. Before making any investment, it’s important to do your own research and be fully informed. Investing in the stock market includes risks, and you should carefully read the Risk Disclosure documents before proceeding. Please remember that past performance doesn’t guarantee future results, and due to market fluctuations, your investment goals may not always be achieved.
