look news india
New Delhi. Special Fixed Deposit (Special FD) schemes of banks have always been the most reliable option for senior citizens looking for safe investments and fixed income. Banks often offer attractive interest rates for particular tenures (like 400, 555 or 777 days) compared to the usual 1 or 2 year traditional FDs.
currently 555 days (about 1.5 years) Many leading commercial banks are offering additional interest of 25 to 50 basis points (0.25% to 0.50%) to senior citizens as compared to normal customers on special period of Rs. If you also have elders in your house, then below is the comparative details of interest rates of 5 top banks to get secure returns on this tenure.
| bank name | Senior Citizen Interest Rate (Annual) | General Citizen Interest Rate | Main feature/type |
| City Union Bank | 7.50% | 7.25% | Highest rate on tenure of 555 days |
| Karnataka Bank | 7.40% | 7.00% | 40 bps additional senior premium |
| Bank of Baroda | 7.25% | 6.75% | Safe Public Sector Bank (PSU) |
| Indian Bank | 7.15% | 6.65% | Additional gain of 50 bps |
| Canara Bank | 7.10% | 6.60% | Trusted Government Bank Network |
(Source: Official interest rates and financial reports of banks. Rates are subject to change from time to time as per the decisions of the Asset-Liability Committee (ALCO) of the bank.
If a senior citizen deposits a lump sum amount of ₹5 lakh for 555 days:
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At the rate of 7.50% (City Union Bank): Based on Quarterly Compounding, only interest of approximately ₹ 59,000 to ₹ 61,000 will be earned in 555 days.
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Option for regular pension income: If senior citizens wish, they can also get the interest in the form of monthly or quarterly payments (Non-Cumulative) instead of lump sum on maturity, thereby providing regular income for household expenses.
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Section 80TTB and TDS Rules: Under Section 80TTB of the Income Tax Act, senior citizens get a deduction (tax exemption) of up to ₹50,000 on bank FD/savings interest in a financial year. Banks deduct TDS if the interest income exceeds the limit. If the total taxable income is less than the basic exemption limit, visit the branch to avoid TDS. Form 15H Can be deposited.
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DICGC Insurance Protection: Under the rules of DICGC, a subsidiary of RBI, the depositor’s principal and interest amount up to ₹ 5 lakh in every bank is fully insured and safe.
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Pre-Mature Withdrawal Rules: Banks usually impose a penalty of 0.5% to 1% on premature break of FD in case of emergency. Therefore, lock only that amount which is not required for the next 555 days.