In an encouraging move for investors and especially for senior citizens, several banks have increased interest rates on Fixed Deposits (FDs) up to 9% per annum, offering one of the highest returns seen in recent years. Small Finance Banks (SFBs), in particular, have led this hike, making FDs an even more attractive, low-risk investment avenue for risk-averse individuals.
If you are a senior citizen or a long-term investor looking for stable returns, now might be the perfect time to lock in higher rates. Let’s dive deeper into which banks are offering these rates, what makes them special, and how you can benefit.
Increased Interest on FD up to 9%
| Feature | Details |
|---|---|
| Top FD Interest Rate | Up to 9% p.a. |
| Top Banks Offering 9% FD Rates | Unity Small Finance Bank, NorthEast Small Finance Bank, Suryoday Small Finance Bank, Utkarsh Small Finance Bank |
| Senior Citizen Additional Interest | ~0.5% extra on standard rates |
| Best Rate for Senior Citizens | 9.10% p.a. by Suryoday Small Finance Bank |
| Insurance on Deposits | Covered under DICGC insurance up to ₹5 lakh |
With FD interest rates touching 9% per annum, especially in Small Finance Banks, this is an excellent time to consider locking in funds for secure and attractive returns. Senior citizens, in particular, can reap strong returns of up to 9.10%, making it a reliable choice for their post-retirement financial planning.
Why Have Banks Increased FD Interest Rates?
The reason behind this surge in FD rates is largely due to the Reserve Bank of India (RBI) maintaining higher repo rates to control inflation. As the repo rate influences how much banks can borrow, banks offer higher FD rates to attract deposits, ensuring sufficient liquidity.
Additionally, Small Finance Banks (SFBs), which aim to promote financial inclusion in underserved sectors, often provide higher FD rates compared to traditional banks to compete for deposits.
Why This is Good News for Senior Citizens
Senior citizens have always been favored when it comes to FD returns. Most banks offer an additional 0.50% to 0.75% interest rate hike for senior citizens. So, with the current high rates, senior citizens can now enjoy returns as high as 9.10% per annum, making FDs an ideal choice for safe, fixed income.
see also: FD Vs SCSS: SBI’s 5-Year FD or SCSS
Banks Offering Up to 9% FD Interest Rates: Complete List
1. Unity Small Finance Bank
- Regular Rate: 9% p.a.
- Tenure: 1001 days
- Senior Citizen Rate: ~9.50% p.a.
Unity SFB has been consistently offering one of the highest FD rates in India. It is an RBI-licensed bank, and deposits are insured under DICGC up to ₹5 lakh.
2. NorthEast Small Finance Bank
- Regular Rate: 9% p.a.
- Tenure: 18 months 1 day to 36 months
- Senior Citizen Rate: ~9.50% p.a.
Ideal for those residing in Northeast India, this bank also offers strong rates to boost deposits in the region.
3. Suryoday Small Finance Bank
- Regular Rate: 8.60% p.a.
- Tenure: 5 years
- Senior Citizen Rate: 9.10% p.a.
A great long-term option with an exceptional rate for seniors.
4. Utkarsh Small Finance Bank
- Regular Rate: 8.50% p.a.
- Tenure: 2 to 3 years (up to 1500 days)
- Senior Citizen Rate: ~9% p.a.
This bank targets both urban and rural customers, offering reliable FD schemes.
How Safe Are FDs in Small Finance Banks?
A valid question that often arises is the safety of FDs in Small Finance Banks compared to traditional public and private sector banks.
Here’s the truth:
- All scheduled SFBs are licensed and regulated by the Reserve Bank of India (RBI).
- Deposits in these banks are protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC). This means up to ₹5 lakh per depositor per bank is insured, including principal and interest.
How to Open an FD in These Banks: Step-by-Step Guide
Opening an FD in any of these banks is straightforward:
Step 1: Choose the Bank
Visit the official website or nearest branch of the bank offering the best rate and suitable tenure.
Step 2: Check Eligibility
For senior citizens, age proof (like Aadhaar, PAN, etc.) is mandatory to avail additional interest.
Step 3: Fill Application Form
Provide necessary KYC documents:
- Identity proof (Aadhaar, PAN)
- Address proof
- Passport-sized photo
- Senior citizen proof (if applicable)
Step 4: Deposit Funds
Transfer the amount through cheque, net banking, or cash, depending on the bank’s process.
Step 5: Collect FD Receipt
The bank will provide you with an FD receipt showing:
- Deposit amount
- Tenure
- Interest rate
- Maturity date & amount
Practical Tips for Maximizing FD Returns
- Ladder Your FDs: Instead of putting a lump sum into one FD, split it across different tenures to take advantage of changing rates and liquidity needs.
- Prefer Cumulative FDs: Opt for cumulative FDs to let the interest compound, maximizing returns.
- Check Senior Citizen Benefits: Always verify if you’re getting the extra 0.50%-0.75% senior benefit.
- Tax Consideration: Interest earned on FDs is taxable. Consider using Form 15H (for seniors) to avoid TDS if income is below taxable limits.
see also: Know the Right Way to Invest and Interest Rates LIC FD Scheme
Increased Interest on FD FAQs
1. Are these high FD rates safe for large investments?
Yes, deposits in these banks are insured up to ₹5 lakh by DICGC. For amounts beyond ₹5 lakh, spreading across multiple banks is advisable.
2. Which bank currently offers the highest FD interest rate for senior citizens?
Suryoday Small Finance Bank offers 9.10% p.a., which is among the highest in India as of March 2025.
3. What is the minimum amount to open an FD in these banks?
Generally, the minimum amount starts from ₹1,000 to ₹10,000, depending on the bank.
4. Do Small Finance Banks have RBI approval?
Yes, all SFBs mentioned are licensed and regulated by the Reserve Bank of India.
5. Is premature withdrawal allowed?
Most banks allow premature withdrawal but may levy a penalty. Check individual bank policies before investing.
