FD rates up to 8.40%: Small finance banks lead, PSU banks stay lower

FD Rates for Senior citizen: Senior citizens can now earn up to 8.40% on fixed deposits, with Suryoday Small Finance Bank offering the highest rate

The benchmark Indian equity indices slipped again on Friday, marking their sixth straight session of losses. Nifty closed at its lowest level in seven months. With such uncertainty weighing on markets, many risk-averse investors, particularly senior citizens, are turning once again to the dependable option of fixed deposits.

 

Most banks offer senior citizens higher returns, usually about 50 basis points more than standard rates. “So, it makes sense to choose senior citizen FDs and compare the interest rates of banks where you are planning to start your FD accounts,” said Adhil Shetty, CEO of Bankbazaar.com.

 

Best banks for senior citizen FD interest rates

 

Many prefer banks they already have a relationship with, but it may be worth exploring others if they offer stronger returns. Small finance banks, for example, are offering some of the highest FD rates for senior citizen in the market. 

 

 

Examples, provided by Paisabazaar include:

 

Suryoday Small Finance Bank FD Rates

Highest: 8.40% (5 years)

1 year: 7.60% | 3 years: 7.45% | 5 years: 8.40% | 10 years: 7.45%

 

Utkarsh Small Finance Bank

Highest: 8.15% (2–3 years)

1 year: 6.50% | 3 years: 8.15% | 5 years: 7.75% | 10 years: 7.50%

 

ESAF Small Finance Bank

Highest: 8.10% (444 days)

1 year: 5.25% | 3 years: 6.50% | 5 years: 6.25% | 10 years: 6.25%

 

Jana Small Finance Bank

Highest: 8% (above 2–3 years; also 5 years)

1 year: 7.75% | 3 years: 8% | 5 years: 8% | 10 years: 7%

 

Among private and public sector banks:

 

Private sector banks FD Rates

 

SBM Bank India

Highest: 8% (5 years)

1 year: 7.40% | 3 years: 7.50% | 5 years: 8% | 10 years: 7.20%

 

YES Bank FD Rates

Highest: 7.75% (3–<5 years)

1 year: 7.15% | 3 years: 7.75% | 5 years: 7.50% | 10 years: 7.50%

 

Bandhan Bank FD Rates

Highest: 7.70% (2–<3 years)

1 year: 7.50% | 3 years: 7.50% | 5 years: 6.60% | 10 years: 6.60%

 

RBL Bank FD Rates

Highest: 7.70% (18 months–3 years)

1 year: 7.50% | 3 years: 7.70% | 5 years: 7.20% | 10 years: 7.20%

Super Senior Citizens: +0.25% across all tenures

 

Public sector banks FD Rates

 

Central Bank of India

Highest: 7.25% (2222 days; 3333 days)

1 year: 6.90% | 3 years: 6.75% | 5 years: 6.75% | 10 years: 6.75%

 

Bank of Maharashtra

Highest: 7.20% (366 days)

1 year: 6.70% | 3 years: 6.70% | 5 years: 6.60% | 10 years: 6.60%

 

Indian Bank 

Highest: 7.20% (444 days)

1 year: 6.60% | 3 years: 6.75% | 5 years: 6.50% | 10 years: 6.75%

Super Senior Citizens: +0.25%

 

Indian Overseas Bank

Highest: 7.20% (444 days)

1 year: 7.10% | 3 years: 6.70% | 5 years: 6.70% | 10 years: 6.70%

Super Senior Citizens: +0.25%

 

Punjab & Sind Bank

Highest: 7.20% (444 days)

1 year: 6.50% | 3 years: 6.50% | 5 years: 6.60% | 10 years: 6.50%

Super Senior Citizens: +0.15% (on special tenures: 375, 444, 777, 999 days, and Green Earth deposits)

 

FD laddering strategy for senior citizens

 

Rather than investing the full amount in one FD, senior citizens can split their money across multiple deposits with different maturities. “For instance, if you have Rs 20 lakh to invest, you can split it into four FDs of Rs 5 lakh each with maturities of 1 year, 1.5 years, 2 years, and 2.5 years, providing you with annual liquidity as each FD matures,” explained Vijay Kuppa, CEO of InCred Money.

 

This approach also ensures coverage under the Deposit Insurance and Credit Guarantee Corporation (DICGC), which insures up to Rs 5 lakh per depositor, per bank. It can also help reduce tax deducted at source (TDS), since interest income spread across deposits may stay below the Rs 50,000 annual threshold for senior citizens.

 

Keep track of changing FD rates

 

Banks revise FD rates from time to time, so investors may find it worthwhile to switch their deposits if more attractive rates become available.

 

FD tenure options explained

 

The FD tenure is the agreed period during which funds remain locked. “You can arrange FD tenures into short, mid, and long terms. Short-term would range from 7 days to 1 year, mid-term from 1–5 years, and long-term from 5–10 years. Generally, longer tenures give you higher interest rates, but short-term FDs provide frequent access to funds,” said Shetty.

 

Cumulative vs non-cumulative FD for seniors

 

There are two common options: cumulative and non-cumulative. “In a cumulative FD, interest is compounded annually and reinvested with the principal, leading to increased returns over time. Non-cumulative FDs cater to investors who prefer regular interest income, as interest is paid out monthly, quarterly, half-yearly, or annually,” Shetty added.

 

Premature withdrawal rules for FD

 

Depositors can withdraw before maturity, but the interest is recalculated at the rate applicable for the shorter tenure, and penalties are usually imposed. This reduces overall returns, so planning FD tenures in line with liquidity needs is advisable.