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Fixed Deposit (FD) is still the most reliable source of capital security and guaranteed returns for Indian investors. At present, there is a competition among banks to offer attractive interest on special tenure FD schemes. While big government and private banks are offering interest ranging from 6.50% to 7.25% on special FDs of 400 to 555 days, small finance banks are offering the highest returns of 8.25% to 8.50%.
Senior citizens get the benefit of 0.50% to 0.75% additional interest compared to general customers in all banks.
| bank name | Best Tenure / Special Scheme | General Citizen (Maximum Rate) | Senior Citizen (Maximum Rate) |
| State Bank of India (SBI) | 444 days (Amrit Vrishti) / 2-3 years | 6.60% | 7.10% |
| HDFC Bank | 35 to 55 months | 6.60% | 7.10% |
| ICICI Bank | 15 to 18 months | 6.60% | 7.10% |
| Bank of Baroda (BOB) | 444 days (Bob Squared) / 555 days | 6.65% – 7.15% | 7.15% – 7.65% |
| Punjab National Bank (PNB) | 444 days special | 6.50% – 6.85% | 7.00% – 7.35% |
| Yes Bank / IndusInd Bank | 18 months to 2 years | 7.00% – 7.25% | 7.50% – 7.75% |
| Small Finance Bank (Unity, Suryoday, Utkarsh) | 1 year to 3 years | 7.75% – 8.25% | 8.25% – 8.50% |
(Note: Interest rates are applicable on retail deposits below ₹3 crore and are revised from time to time as per the discretion of the banks).
If you fix an amount of ₹5,00,000 for 3 years at different interest rates (with quarterly compounding):
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At 6.60% per annum (Large Government/Private Banks):
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Total Interest Earned: Approx ₹1,08,350
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Total amount on maturity: Approx ₹6,08,350
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At 7.10% per annum (Senior Citizens – Large Banks):
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Total Interest Earned: Approx ₹1,17,800
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Total amount on maturity: Approx ₹6,17,800
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At 8.25% per annum (Small Finance Bank):
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Total Interest Earned: Approx ₹1,39,600
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Total amount on maturity: Approx ₹6,39,600
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Instead of locking all the money in lump sum in a single FD for 5 years, divide the amount into different maturity periods.
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Suppose you have ₹6 lakh, then make three FDs of ₹2 lakh each (for 1 year, 2 years and 3 years).
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As soon as the first year FD matures, reinvest it again for the next 3 years.
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With this, you will have liquidity available every year and you will be able to take full advantage of rising interest rates.
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DICGC Insurance: Under RBI regulations, every bank (public, private and small finance banks) has a 100% security guarantee from the Deposit Insurance and Credit Guarantee Corporation (DICGC) on both the principal amount and interest up to ₹5 lakh per account holder. To keep the risk low, it is wise to divide large capital deposits in 2 to 3 different banks.
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TDS Rules: Banks deduct TDS if the FD interest exceeds ₹40,000 in a financial year for general citizens and ₹50,000 for senior citizens (section 80TTB). If the total annual income is within the tax exemption limit, submit Form 15G (General Citizen) or Form 15H (Senior Citizen) to the bank to avoid TDS.