Are you planning to invest your hard-earned money in a safe and reliable instrument? If yes, then Fixed Deposits (FDs) still remain one of the most popular investment options in India, especially for conservative investors. And now, in 2025, some banks are offering exceptionally high FD interest rates that can help you grow your ₹1 lakh investment into ₹1.40 lakh or more over the right tenure.
Get a Return of ₹1,40,000 on ₹1 Lakh: FD High Interest Rate
| Feature | Details |
|---|---|
| FD Investment | ₹1,00,000 |
| Highest Return | ₹1,40,000 (approx.) |
| Top Interest Rate | 9.50% p.a. for senior citizens |
| Top Banks | Unity SFB, North East SFB, Suryoday SFB, Shivalik SFB, Utkarsh SFB |
| Tenure for Best Returns | 1001 days to 5 years |
| Deposit Insurance | ₹5 lakh per bank under DICGC |
If you want to grow your money safely while earning exceptional interest, these top 5 small finance banks in 2025 are offering some of the best FD returns in India. With interest rates as high as 9.50% p.a., even a simple ₹1 lakh investment can grow to over ₹1.40 lakh — beating inflation and most regular savings instruments.
Just make sure to:
- Diversify across banks
- Match tenure to your goal
- Verify FD terms on the official bank websites
With smart planning and due diligence, FDs can still
see also: HDFC and ICICI Slash Savings Account Interest Rates in April 2025
Understanding FD Returns – How ₹1 Lakh Becomes ₹1.40 Lakh
Let’s start with a simple example. If you invest ₹1 lakh at an interest rate of 9.00% per annum for approximately 5 years, and allow the interest to compound quarterly (as most banks do), your maturity amount can go up to ₹1,40,000 or even more.
Formula used:
M = P (1 + r/n) ^ nt
Where M = Maturity Amount, P = Principal, r = Annual interest rate, n = compounding frequency, t = tenure in years
This is significantly higher than what large commercial banks like SBI, HDFC, or ICICI offer (usually between 6.5%–7.25% p.a.).
Top 5 Banks Offering Highest FD Interest Rates in 2025
Below is the list of 5 small finance banks (SFBs) offering the best FD returns in 2025, along with tenure details and senior citizen benefits.
1. Unity Small Finance Bank (Unity SFB)
- Regular Interest Rate: 9.00% p.a.
- Senior Citizen Rate: 9.50% p.a.
- Best Tenure: 1001 Days
Unity SFB is making headlines with one of the highest FD interest rates in India right now. With a ₹1 lakh deposit, you can earn nearly ₹1.40 lakh at maturity over 1001 days.
Pro Tip: Ideal for short-term investors seeking high returns with guaranteed safety under DICGC.
2. North East Small Finance Bank
- Regular Interest Rate: 9.00% p.a.
- Senior Citizen Rate: 9.50% p.a.
- Best Tenure: 18 Months to 36 Months
This Assam-based bank is offering 9% interest, which is extremely competitive. It’s especially useful for customers from the northeast region but available nationwide for investors seeking high FD returns.
3. Suryoday Small Finance Bank
- Regular Interest Rate: 8.60% p.a.
- Senior Citizen Rate: 9.10% p.a.
- Best Tenure: 5 Years
Suryoday SFB is ideal for long-term investors. With a 5-year lock-in period, you not only earn high returns but also get quarterly compounding for better growth.
4. Shivalik Small Finance Bank
- Regular Interest Rate: 8.55% p.a.
- Senior Citizen Rate: 9.05% p.a.
- Best Tenure: 12 to 18 Months
One of the newer entrants, Shivalik SFB provides competitive rates with flexible tenure options. It’s a great option if you’re not ready to lock funds for 5 years.
5. Utkarsh Small Finance Bank
- Regular Interest Rate: 8.50% p.a.
- Senior Citizen Rate: 9.00% p.a.
- Best Tenure: 2 to 3 Years
Utkarsh SFB is popular in rural and semi-urban India, and its attractive FD plans are now drawing urban investors as well.
Is It Safe to Invest in These Banks?
Many people hesitate to invest in small finance banks (SFBs) fearing risk. But here’s the good news:
- All these banks are RBI-regulated and operate under strict guidelines.
- Your FD up to ₹5 lakh (per bank) is insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme.
- You can also spread your investment across 2–3 SFBs to reduce risk further.
How to Choose the Best FD for Your Goals
Step 1: Define Your Investment Horizon
- For short-term goals (1–2 years): Go with Shivalik or Utkarsh SFB.
- For mid-term goals (2–3 years): North East SFB and Unity SFB are ideal.
- For long-term savings (5 years+): Choose Suryoday SFB.
Step 2: Compare FD Rates Online
Use official websites or aggregators like BankBazaar to compare current FD rates before investing.
Step 3: Check Compounding Frequency
Quarterly compounding gives better returns than yearly or half-yearly. Most top banks offer quarterly compounding.
Step 4: Go Digital
All these banks support online FD opening through net banking or mobile apps — no need to visit a branch.
Who Should Consider These High FD Rates?
These FDs are especially suitable for:
- Senior Citizens seeking steady monthly income
- Risk-averse investors looking for capital safety
- Salaried individuals planning short-term savings
- Parents building an education fund
- Retirees looking for better returns than savings accounts
see also: Bank of India Cuts Interest Rates and Discontinues 400-Day Special Scheme
FD High Interest Rate FAQs
Q1. Are small finance banks as safe as public sector banks?
Yes, all are regulated by the RBI. Deposits up to ₹5 lakh are insured under DICGC, just like in SBI or HDFC.
Q2. How do I calculate the return on FD?
Use the bank’s FD calculator available on their website. Or apply the compound interest formula with quarterly compounding.
Q3. Can I break my FD before maturity?
Yes, but you may incur a penalty (usually 0.50%–1% lower interest). Always check the premature withdrawal rules.
Q4. Are these rates applicable to tax-saving FDs?
No. Tax-saving FDs have fixed tenures (5 years) and usually lower rates (6.5%–7.5%). These rates are for regular FDs.
Q5. How often is FD interest paid out?
It depends. You can choose cumulative (at maturity) or non-cumulative (monthly/quarterly payouts).be one of the safest and most rewarding financial tools in your investment arsenal.
