Best FD rates: Check out 14 banks offering 8-9% interest to investors

This might be your last chance to lock in high fixed deposit interest rates before a possible cut in December

Are you planning to invest in fixed deposits (FDs)? With small finance banks offering competitive interest rates, now could be the ideal moment. Leading the pack, NorthEast Small Finance Bank and Unity Small Finance Bank provide 9% interest for specific tenures, while Suryoday Small Finance Bank offers 8.60% for deposits over two years. Among private banks, SBM Bank India gives 8.25% for deposits under two years, and RBL Bank offers 8.10% for a 500-day term.

 

Here’s a breakdown of the banks and Fixed deposit rates offered, according to Paisabazaar:

 

Small Finance Banks

1. AU Small Finance Bank

Highest rate: 8%

 

Slab: 18 months

Other tenures: 7.25% (1 year), 7.50% (3 years), 7.25% (5 years)

 

2. Equitas Small Finance Bank

Highest rate: 8.25%

Slab: 444 days

Other tenures: 8.10% (1 year), 8% (3 years), 7.25% (5 years)

 

3. ESAF Small Finance Bank

Highest rate: 8.25%

Slab: 2 years to less than 3 years

Other tenures: 6% (1 year), 6.75% (3 years), 6.25% (5 years)

 

4. Jana Small Finance Bank

Highest rate: 8.25%

Slab: 1 year to 3 years

Other tenures: 8.25% (1 year), 8.25% (3 years), 8.20% (5 years)

 

5. NorthEast Small Finance Bank

Highest rate: 9%

Slab: 546 days to 1111 days

Other tenures: 7% (1 year), 9% (3 years), 6.25% (5 years)

 

6. Suryoday Small Finance Bank

Highest rate: 8.60%

Slab: Above 2 years to 3 years

Other tenures: 8.05% (1 year), 8.60% (3 years), 8.25% (5 years)

 

7. Ujjivan Small Finance Bank

Highest rate: 8.25%

Slab: 12 months

Other tenures: 8.25% (1 year), 7.20% (3 years), 7.20% (5 years)

 

8. Unity Small Finance Bank

Highest rate: 9%

Slab: 1001 days

Other tenures: 7.85% (1 year), 8.15% (3 years), 8.15% (5 years)

 

9. Utkarsh Small Finance Bank

Highest rate: 8.50%

Slab: 2 years to 3 years; 1500 days

Other tenures: 8% (1 year), 8.50% (3 years), 7.75% (5 years)

 

Private Sector Banks

10. Bandhan Bank

Highest rate: 8.05%

Slab: 1 year

Other tenures: 8.05% (1 year), 7.25% (3 years), 5.85% (5 years)

 

11. DCB Bank

Highest rate: 8.05%

Slab: 19 months to 20 months

Other tenures: 7.10% (1 year), 7.55% (3 years), 7.40% (5 years)

 

12. RBL Bank

Highest rate: 8.10%

Slab: 500 days

Other tenures: 7.50% (1 year), 7.50% (3 years), 7.10% (5 years)

 

13. SBM Bank India

Highest rate: 8.25%

Slab: Above 18 months to less than 2 years 3 days

Other tenures: 7.05% (1 year), 7.30% (3 years), 7.75% (5 years)

 

Foreign Bank

14. Deutsche Bank

Highest rate: 8%

Slab: Above 1 year to 3 years

Other tenures: 7% (1 year), 8% (3 years), 7.50% (5 years)

 

Why should you lock in FD rates now?

 

This might be your last chance to lock in high rates before a potential cut. The Reserve Bank of India (RBI) will announce its monetary policy decision in December, with the possibility of a rate reduction.

 

“For those with fixed deposits, now is an opportune moment to lock in high interest rates, as rates are expected to decline in the coming months,” said Adhil Shetty, CEO of Bankbazaar.

 

He explained that the prolonged high repo rates have resulted in banks offering attractive FD returns. However, with the central bank preparing for potential rate cuts based on inflation data and economic conditions, these attractive rates may not last. “Locking in your deposits now ensures that you can secure the best possible returns for the long term, protecting your savings from future rate reductions,” Shetty added.

 

FD interest is taxable in India

 

Did you know that the interest earned on fixed deposits is taxable? It is taxed based on the individual’s income tax slab and not the principal amount.

 

“The interest is added to your total income and taxed according to your income tax slab,” said Shetty. He further explained that banks deduct 10% TDS if the interest exceeds Rs 50,000 for senior citizens (Rs 40,000 for others). This rate rises to 20% if the PAN is not provided.

 

Let’s take Mr Joshi, a 50-year-old resident of Jaipur, as an example:

 

Total interest earned: Rs 75,000 annually

TDS threshold: Rs 40,000 for general citizens

TDS deducted: 10% of Rs 75,000 = Rs 7,500

 

The Rs 75,000 interest will be added to Mr Joshi’s taxable income. If his total income is below Rs 2.5 lakh, no additional tax will be payable.

 

To avoid TDS deductions, Mr Joshi can submit Form 15G at the beginning of the financial year. This declaration confirms his income is below the taxable limit, ensuring no upfront TDS is deducted.

 

What to consider before investing

 

Tenure flexibility: Choose a bank offering competitive rates for your preferred duration.

Tax implications: Factor in the post-tax returns, as interest is taxable.

Current economic trends: Locking in rates now could maximise returns if rates fall.