FD rates in Sept: 15 banks with best deals as Fed cut sparks concern

Best FD rates in Sept: The Fed's first rate cut since December 2024 could push Indian banks to trim deposit returns further, making this a key moment for savers to lock in fixed deposit rates

For Indian savers who rely on fixed deposits, the US Federal Reserve’s rate cut on Thursday may be a cue to act quickly. The Fed lowered the federal funds rate by 25 basis points to a range of 4%–4.25%, its first reduction since December 2024.

 

"If the Fed continues to ease and the RBI cuts another 50 basis points, FDs could slip closer to 6%. This is particularly relevant for senior citizens who rely on interest for regular income. Even a 0.5% drop can leave a noticeable dent in monthly cash flows," said Adhil Shetty, CEO, BankBazaar.com.

 

Markets will now be watching whether the Reserve Bank of India (RBI) will follow with more cuts, which could bring deposit rates down further.

 

In its last policy review on August 6, the RBI left the repo rate unchanged at 5.5%. But it has already trimmed rates by 100 basis points in 2025, a move that has pushed lenders to scale back on deposit offerings.

 

Fixed deposits hold ground

 

Despite softening rates, fixed deposits continue to appeal to those who prefer stability.

 

"For FD investors, the smarter move is to diversify or ladder deposits. Laddering FDs—staggering them across different maturities—can help soften the impact of rate cuts," Shetty recommended.

 

Take a look at the highest rates across banks and NBFCs, according to data shared by Paisabazaar:

List of Best FD Rates Offer by Bank in Sept 2025:

 

Small finance banks FD Rates

 

ESAF Small Finance Bank

Highest: 7.60% (444 days)

1-year: 4.75%

3-year: 6%

5-year: 5.75%

 

Jana Small Finance Bank

Highest: 8% (5 years)

1-year: 7.25%

3-year: 7.50%

5-year: 8%

 

slice Small Finance Bank

Highest: 7.75% (18 months 1 day to 18 months 2 days)

1-year: 6.25%

3-year: 7.50%

5-year: 7%

 

Suryoday Small Finance Bank

Highest: 8.20% (5 years)

1-year: 7.40%

3-year: 7.25%

5-year: 8.20%

 

Utkarsh Small Finance Bank

Highest: 7.65% (2 years to 3 years)

1-year: 6%

3-year: 7.65%

5-year: 7.25%

 

Private sector banks FD Rates

 

Bandhan Bank

Highest: 7.20% (2 years to less than 3 years)

1-year: 7%

3-year: 7%

5-year: 5.85%

 

DCB Bank

Highest: 7.20% (27 months to <28 months; above 60 months to 61 months)

1-year: 6.90%

3-year: 7%

5-year: 7%

 

Jammu & Kashmir Bank

Highest: 7.10% (888 days)

1-year: 6.60%

3-year: 6.75%

5-year: 6.50%

 

RBL Bank

Highest: 7.20% (2 years 1 day to 3 years)

1-year: 7%

3-year: 7.20%

5-year: 6.70%

 

SBM Bank India

Highest: 7.50% (5 years)

1-year: 6.90%

3-year: 7%

5-year: 7.50%

 

Public sector banks FD Rates

 

Bank of Maharashtra

Highest: 6.70% (366 days)

1-year: 6.20%

3-year: 6.20%

5-year: 6.10%

 

Central Bank of India

Highest: 6.75% (2222 days; 3333 days)

1-year: 6.40%

3-year: 6.25%

5-year: 6.25%

 

Indian Bank

Highest: 6.70% (444 days)

1-year: 6.10%

3-year: 6.25%

5-year: 6%

 

Indian Overseas Bank

Highest: 6.70% (444 days)

1-year: 6.60%

3-year: 6.20%

5-year: 6.20%

 

Punjab & Sind Bank

Highest: 6.70% (444 days)

1-year: 6%

3-year: 6%

5-year: 6.10%

 

Tax rules on FD interest

 

Interest earned on fixed deposits is taxable, with tax deducted at source (TDS) once it crosses a limit. Budget 2025 revised these thresholds:

 

• ₹50,000 for general citizens (up from ₹40,000)

• ₹1 lakh for senior citizens 

 

Example of TDS calculation

 

Take Amit, a 28-year-old from Delhi, who earns ₹75,000 a year from fixed deposits.

 

• Since the TDS limit for general citizens is ₹50,000, the taxable portion is ₹25,000.

• Tax at 10% is deducted on this excess, amounting to ₹2,500.

• The ₹75,000 is added to his annual income. If his total income is below ₹2.5 lakh, he owes no further tax.

• By submitting Form 15G at the start of the year, he can avoid TDS if his income is below the taxable threshold.