Fixed Deposits (FDs) remain one of the most trusted and popular investment options for Indians, especially when safety, assured returns, and ease of use are top priorities. In April 2025, a few banks, especially small finance banks, are offering the highest return on 1-year FDs, helping investors earn profits of up to Rs 23,000 in just one year.
Highest Return on 1-Year FD in 2025
| Feature | Details |
|---|---|
| Top Interest Rate (General) | Up to 8.25% p.a. (Suryoday Small Finance Bank) |
| Top Rate (Senior Citizens) | Up to 8.75% p.a. |
| Max Return Example | Rs 23,000 on ~Rs 2.87 lakh in 1 year at 8% interest |
| Top Banks Offering High 1-Year FD Rates | Suryoday SFB, Utkarsh SFB, Jana SFB, Unity SFB |
| Insurance Coverage | Up to Rs 5 lakh by DICGC |
If you’re looking for safe, fixed returns in just 1 year, now is a great time to explore high-interest FDs from small finance banks. By investing wisely and staying within insured limits, you can safely earn returns up to Rs 23,000, making your money work harder for you. Whether you’re a retiree, salaried worker, or conservative investor, a 1-year FD in 2025 can be a smart, secure financial move.
Why FDs Still Matter in 2025
Despite the rise in mutual funds and equity investments, FDs continue to be a favorite among risk-averse investors, retirees, and salaried individuals. They offer guaranteed returns, fixed interest, and safety for principal amounts. Now with small finance banks offering over 8% returns, they have become even more attractive.
see also: Post Office’s Time Deposit Scheme Gives Bumper Returns
Top Banks Offering the Highest FD Interest Rates (April 2025)
Here’s a snapshot of the best 1-year FD rates in India:
General Public FD Rates:
| Bank | Interest Rate (1-Year) |
|---|---|
| Suryoday Small Finance Bank | 8.25% |
| Utkarsh Small Finance Bank | 8.00% |
| Jana Small Finance Bank | 7.50% |
| Unity Small Finance Bank | 7.25% |
| ICICI Bank | 6.70% |
| HDFC Bank | 6.60% |
| Axis Bank | 6.70% |
Senior Citizen FD Rates:
| Bank | Interest Rate (1-Year) |
|---|---|
| Suryoday Small Finance Bank | 8.75% |
| Utkarsh Small Finance Bank | 8.60% |
| Jana Small Finance Bank | 8.00% |
| Unity Small Finance Bank | 7.75% |
| ICICI Bank | 7.20% |
| HDFC Bank | 7.10% |
| Axis Bank | 7.20% |
Tip: Always check the bank’s official website or visit a branch to confirm the latest rates.
How to Earn Rs 23,000 in 1 Year from FD
Let’s do the math:
If a bank offers 8% interest on a 1-year FD, and you want to earn a profit (interest) of Rs 23,000, use this formula:
Investment = Interest / (Interest Rate)
= 23,000 / 0.08 = Rs 2,87,500
So, by investing Rs 2.87 lakh for 1 year at 8%, you will get Rs 23,000 as profit.
If you invest:
- Rs 1 lakh @ 8% → You earn Rs 8,000
- Rs 2 lakh @ 8% → You earn Rs 16,000
- Rs 2.87 lakh @ 8% → You earn Rs 23,000
Are Small Finance Banks Safe?
Yes, deposits in all scheduled commercial banks, including small finance banks, are insured by DICGC (Deposit Insurance and Credit Guarantee Corporation) up to Rs 5 lakh.
So, even if the bank faces a financial crisis, your money (up to Rs 5 lakh per bank) is safe.
Pros and Cons of High-Interest FDs
Pros
- High Guaranteed Returns
- Low Risk with DICGC protection
- Flexible Tenure Options
- Special Rates for Senior Citizens
- Premature Withdrawal Available (with penalty)
Cons
- Interest is Taxable as per your slab
- Returns may not beat inflation in high-inflation years
- Limited liquidity compared to savings accounts
How to Open a High-Interest 1-Year FD
Follow these simple steps:
- Choose the Bank: Go for top FD rates (like Suryoday or Utkarsh SFB)
- Visit the Bank or Website: FD can be opened online or offline
- Select Tenure & Amount: Choose 1 year and investment value (e.g. Rs 2.87 lakh)
- Submit KYC Documents: PAN, Aadhaar, and address proof
- Deposit the Amount: Via UPI, net banking, cheque, or cash
- Collect FD Receipt or Certificate
Most banks also offer FD calculators online to help you see the maturity amount.
Practical Advice for Investors
- If your FD amount exceeds Rs 5 lakh, split it across multiple banks to stay under the DICGC limit.
- Prefer cumulative FDs if you don’t need regular income. They offer better compounding benefits.
- For monthly income, opt for non-cumulative FDs.
- Senior citizens should compare rates and use the extra interest advantage (up to 0.75% more).
Tax Implications on FD Returns
- TDS is applicable if annual interest exceeds Rs 40,000 (Rs 50,000 for seniors).
- Submit Form 15G/15H if your total income is below taxable limits to avoid TDS.
- FD interest is fully taxable under “Income from Other Sources.”
see also: Post Office National Savings Certificate (NSC): How to Turn ₹ 72 Lakh in 5 Years
Highest Return on 1-Year FD in 2025 FAQs
Q1. Which bank is giving the highest interest on 1-year FD in April 2025?
Suryoday Small Finance Bank is currently offering the highest interest at 8.25% for general public and 8.75% for senior citizens.
Q2. How much should I invest to earn Rs 23,000 profit in 1 year?
You need to invest approximately Rs 2.87 lakh at 8% interest to earn Rs 23,000 in one year.
Q3. Are FDs in small finance banks safe?
Yes. Deposits up to Rs 5 lakh per bank are insured by DICGC, even for small finance banks.
Q4. Is the FD interest taxable?
Yes. Interest earned on FDs is taxable as per your income tax slab. TDS is also applicable above the threshold.
Q5. Can I withdraw my FD before 1 year?
Yes, but there may be a penalty for premature withdrawal. The interest rate may also be reduced.
