Fixed Deposits (FDs) continue to be one of the safest and most popular investment options in India, especially for conservative investors. But what if you could get up to 8.25% interest on a short-term, 12-month FD? Yes, certain private and small finance banks are now offering this lucrative rate, and if you invest smartly, you could earn up to ₹35,000 in a single go.
12-Month FD of a Private Bank
| Aspect | Details |
|---|---|
| High-Interest FDs | Some banks offer up to 8.25% p.a. on 12-month FDs |
| ₹35,000 Profit Estimate | Invest approximately ₹4,24,243 at 8.25% interest for 12 months |
| Top Banks Offering This | Ujjivan SFB, Suryoday SFB, Equitas SFB, IndusInd Bank (for seniors) |
| Senior Citizen Rates | Extra 0.25%-0.75% interest for seniors; up to 8.25% at IndusInd Bank |
| Tax Implications | Interest is taxable as per your income tax slab; TDS may apply |
| Insurance Coverage | Deposits up to ₹5 lakh insured by DICGC |
If you’re looking for safe, high-return investment options, a 12-month FD offering 8.25% interest could be an excellent opportunity. With proper planning and a principal investment of around ₹4.24 lakh, you could earn ₹35,000 in one go, making it ideal for short-term wealth building or parking surplus funds.
Always compare FD rates, factor in tax liabilities, and choose a reputed bank. Senior citizens, in particular, can benefit from even higher rates. Whether you’re a cautious saver or a professional looking to diversify, this is a smart way to let your money grow securely.
How Much to Invest to Earn ₹35,000 in 12 Months?
To calculate how much money you’d need to earn ₹35,000 in a year from an FD offering 8.25% interest, use this basic formula:
Interest = Principal × Rate × Time
Here:
- Rate = 8.25% or 0.0825
- Time = 1 year
- Interest = ₹35,000
So, Principal = ₹35,000 / 0.0825 = ₹4,24,243 (approx.)
Bottom line: You need to invest roughly ₹4.24 lakh to earn ₹35,000 in one year with 8.25% annual interest.
see also: Post Office New Interest Rates April 2025
Which Banks Are Offering 8.25% FD Interest in April 2025?
Here’s a list of banks currently offering 8.25% fixed deposit interest rates:
1. Ujjivan Small Finance Bank
- Interest Rate: 8.25% p.a.
- Tenure: 12 months and above
- Note: General citizens can avail this rate
2. Suryoday Small Finance Bank
- Interest Rate: 8.25% p.a.
- Tenure: 1 year
- Eligibility: Both regular and senior citizens
3. Equitas Small Finance Bank
- Interest Rate: 8.25% p.a.
- Tenure: 888 days (around 2.4 years)
- Best For: Long-term investors looking for consistent returns
4. IndusInd Bank (Senior Citizens Only)
- Interest Rate: Up to 8.25% p.a.
- Tenure: Multiple options available
- Bonus: Flexible interest payout options (monthly, quarterly, or at maturity)
Step-by-Step Guide to Investing in High-Interest FDs
Step 1: Research Interest Rates
Use tools like bank websites or FD comparison portals to check updated rates.
Step 2: Decide Your Investment Amount
Use the formula shared above to estimate how much to invest to earn your target return.
Step 3: Choose Tenure and Payout Option
Pick a tenure and interest payout (monthly/quarterly/yearly) that suits your financial goals.
Step 4: Check Eligibility for Senior Citizen Rates
If you’re 60 or above, check for senior citizen special interest rates.
Step 5: Open FD Online or at a Branch
Most banks allow FD creation through their internet banking or mobile apps.
Step 6: Track Your Investment
Keep a reminder for maturity dates and reinvest if necessary to continue earning.
Tax on Fixed Deposit Interest
Interest earned on FDs is fully taxable under “Income from Other Sources.” Here’s what to know:
- TDS Deduction: 10% TDS is deducted if your FD interest exceeds ₹40,000/year (₹50,000 for senior citizens).
- Tax Filing: Declare interest income in your ITR even if TDS is already deducted.
- Form 15G/15H: Submit to avoid TDS if your total income is below the exemption limit.
Are These FDs Safe?
Yes. All fixed deposits made with scheduled banks and small finance banks are covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
- Coverage: Up to ₹5 lakh per depositor per bank (includes both principal + interest)
- Tip: If you’re investing more than ₹5 lakh, spread across different banks to stay fully insured.
see also: Invest ₹5000 Every Month in Post Office RD Scheme How Much You’ll Get After 10 Years
12-Month FD of a Private Bank FAQs
Q1. Can I withdraw my FD before the full term?
Yes, but you’ll incur a penalty and may get a lower interest rate than originally agreed.
Q2. Are these small finance banks trustworthy?
Yes, they are regulated by the RBI, and deposits are insured under DICGC.
Q3. Are these interest rates fixed for the whole tenure?
Yes, once you open the FD, the rate remains fixed for the entire tenure, regardless of market fluctuations.
Q4. Can I open this FD online?
Yes, most banks allow online FD account opening via internet banking or mobile apps.
Q5. Should I choose cumulative or non-cumulative FD?
- Cumulative FD: Interest paid at maturity—good for long-term goals.
- Non-Cumulative FD: Interest paid monthly/quarterly—better for regular income.
