Fixed Deposits (FDs) remain one of the most secure and preferred investment options for individuals looking for stable returns with minimal risk. As of February 2025, several leading banks, including SBI, are offering interest rates of up to 8% on 1-year FDs. Whether you are a risk-averse investor, a senior citizen, or simply looking for better returns on short-term deposits, this guide will help you understand the best FD interest rates available today.
Top 10 Banks Offering Up to 8% Interest on 1-Year FDs
| Bank Name | Interest Rate for Regular Customers | Interest Rate for Senior Citizens |
|---|---|---|
| Bandhan Bank | 8.05% | 8.55% |
| RBL Bank | 8.00% | 8.50% |
| IndusInd Bank | 7.99% | 8.49% |
| IDFC First Bank | 7.90% | 8.40% |
| DCB Bank | 7.25% | 7.75% |
| Tamilnad Mercantile Bank | 7.25% | 7.75% |
| Karnataka Bank | 7.00% | 7.40% |
| Deutsche Bank | 7.00% | 7.40% |
| Bank of India | 7.00% | 7.50% |
| State Bank of India (SBI) | 6.80% | 7.30% |
With interest rates going up, now is the perfect time to invest in 1-year Fixed Deposits. If you are looking for high returns with low risk, banks like Bandhan Bank, RBL Bank, and IndusInd Bank offer interest rates close to 8% or more. However, if you prefer stability and security, SBI and Bank of India remain excellent choices. Before investing, always compare rates, check bank credibility, and consider taxation aspects.
Why Choose Fixed Deposits in 2025?
Fixed Deposits have been a go-to investment option for millions of Indians due to their safety and assured returns. Here’s why FDs continue to be a smart investment choice in 2025:
- High Interest Rates: With up to 8% interest on 1-year FDs, investors can earn stable returns compared to savings accounts.
- Low Risk: FDs are considered one of the safest investment options, as they are not subject to market volatility.
- Flexibility: You can choose tenure options ranging from 7 days to 10 years based on your financial needs.
- Loan Facility: You can take a loan against your FD at lower interest rates.
- Senior Citizen Benefits: Most banks offer an additional 0.50% interest rate for senior citizens.
- DICGC Insurance Cover: Deposits up to ₹5 lakh per customer per bank are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), adding another layer of security.
- Auto-Renewal Options: Many banks offer an auto-renewal facility to prevent interest loss due to non-renewal.
see also: How Much You Earn on a ₹2 Lakh Investment in 5 Years
Top 10 Banks Offering the Best FD Rates in 2025
1. Bandhan Bank – 8.05% Interest Rate
Bandhan Bank tops the list with an 8.05% interest rate on 1-year FDs for regular customers and 8.55% for senior citizens. This is an excellent choice for those looking for the highest FD returns in 2025.
2. RBL Bank – 8.00% Interest Rate
RBL Bank offers a competitive 8% interest rate for 1-year deposits, making it a top choice for short-term investors.
3. IndusInd Bank – 7.99% Interest Rate
With a 7.99% rate, IndusInd Bank provides almost 8% returns, making it a great alternative to leading private banks.
4. IDFC First Bank – 7.90% Interest Rate
Known for its customer-friendly policies, IDFC First Bank offers 7.90% on 1-year FDs, which is quite competitive.
5. DCB Bank – 7.25% Interest Rate
A good option for risk-averse investors, DCB Bank provides 7.25% interest on 1-year fixed deposits.
6. Tamilnad Mercantile Bank – 7.25% Interest Rate
One of the oldest banks in India, Tamilnad Mercantile Bank provides 7.25% returns for 1-year deposits.
7. Karnataka Bank – 7.00% Interest Rate
Karnataka Bank offers 7.00% interest on 1-year FDs, making it a good mid-tier option.
8. Deutsche Bank – 7.00% Interest Rate
This international bank provides 7.00% returns, ensuring stability and trustworthiness.
9. Bank of India – 7.00% Interest Rate
As a government-backed bank, Bank of India offers 7.00% interest, ensuring safety and credibility.
10. State Bank of India (SBI) – 6.80% Interest Rate
SBI, India’s largest public sector bank, offers 6.80% interest for regular customers and 7.30% for senior citizens.
Additional Tips for Maximizing FD Returns
- Compare interest rates across multiple banks before investing.
- Opt for cumulative FDs if you don’t need periodic payouts; this helps earn higher returns due to compounding.
- Consider laddering your FDs by splitting investments into multiple tenures to manage liquidity and risk better.
- Reinvest maturity proceeds for compounding benefits.
see also: Post Office FD Scheme: New Interest Rates & Returns
Top 10 Banks Offering Up to 8% Interest on 1-Year FDs FAQs
1. Which bank is offering the highest interest on 1-year FDs in 2025?
Bandhan Bank offers the highest interest rate of 8.05% for regular customers and 8.55% for senior citizens.
2. Are Fixed Deposits taxable?
Yes, FD interest above ₹40,000 per year (₹50,000 for senior citizens) attracts TDS (Tax Deducted at Source).
3. Can I withdraw my FD before maturity?
Yes, but banks charge a penalty for premature withdrawal. The penalty varies by bank.
4. Is it safe to invest in private bank FDs?
Yes, as long as the bank is RBI-regulated and has a strong credit rating.
5. Should senior citizens invest in FDs?
Yes, because FDs provide guaranteed returns, and senior citizens get higher interest rates.
