Highest FD Rates in India | ||
| Bank / NBFC | Interest Rates (For regular citizens) | Tenure |
| Muthoot Capital FD | 7.25% | 1 year |
| Utkarsh Small Finance Bank | 6.75% | Above 1 year |
| Suryodaya Small Finance Bank | 7.00% | Above 3 Years to less than 5 Years |
| Jana Bank | 6.75% | 3 years 1 day – 5 years |
| SBM Bank | 6.50% | 1 year to 1 year 1 month |
| RBL Bank | 6.30% | 5 years |
| YES Bank | 6.50% | 5 years – 10 years |
| Bajaj Finserv | 6.50% | 3 years – 5 years |
| DCB Bank | 5.95% | 3 years – 10 years |
| IndusInd Bank | 6.00% | 1 year – 5 years |
(The above table are the top 10 FDs with the best FD rates on offer across banks and tenures for regular citizens. Interest rates updated on 7th Oct 2021)
Along with offering assured returns at flexible tenure, another feature of fixed deposits is a credit card against FD. These are secured credit cards that are issued against fixed deposit and are a good option to add to one’s purchasing power while building/improving the credit score.
As can be seen, small finance banks are currently offering the best FD rates, higher than most large banks. While some customers may choose to invest in large and established banks, they should note that deposits made in Small Finance Banks (just like commercial banks) are covered under the depositor insurance program of Deposit Insurance and Credit Guarantee Corporation (DICGC). This means that bank deposits (commercial as well as small finance banks) of up to Rs. 5 lakh, including fixed, recurring, savings and current deposits, per depositor per bank, are insured.
Table of Contents
Fixed Deposits with Tax Saving Benefit
A tax-saving fixed deposit is a type of fixed deposit that is eligible for tax deduction under section 80C of the Income Tax Act.
Banks | Tax Saver FD Interest Rates* | |
| General | Senior Citizens (60 years and above) | |
| RBL Bank | 6.30% | 6.80% |
| SBM Bank | 6.50% | 7% |
| YES Bank | 6.50% | 7% |
| DCB Bank | 5.95% | 6.45% |
| IndusInd Bank | 6.00% | 7% |
| IDFC First Bank | 5.25% | 5.75% |
| Axis Bank | 5.75% | 6.25% |
| Federal Bank | 5.60% | 6.10% |
| State Bank of India | 5.40% | 6.20% |
| HDFC Bank | 5.50% | 6.25% |
| IDBI Bank | 5.40% | 5.75% |
*Interest rates updated on 7th Oct 2021
Important: Interest earned on your fixed deposit is taxed as per your income tax bracket. TDS was formerly paid at a rate of 10% if the interest income on an FD exceeded Rs 10,000 in a financial year (until the annual year 2019-20). The TDS deduction cap on fixed deposits was raised to Rs 40,000 a year in the interim budget of 2019 (applicable from the annual year 2020-21). However, for senior citizens, the threshold limit for TDS on interest is Rs. 50,000. Moreover, they enjoy deduction under Section 80TTB up to Rs 50,000 for all interest received from banks, post offices, among others, including FD interest.
Best FD Rates 2021 offered by Large Banks
Given below are the highest FD rates 2021 from large banks for deposits below Rs. 2 crores:
Bank Name | FD Interest Rates | Deposit Tenure | |
| Regular Customers | Senior Citizens (60 years and above) | ||
| RBL | 6.30% | 6.80% | 1 year to 1 year 1 month |
| SBM | 6.50% | 7.00% | 60 months to 60 months 1 day |
| YES | 6.50% | 7.00% | 5 years and up to 10 years |
| DCB | 5.95% | 6.45% | 36 months to 120 months |
| IndusInd | 6.00% | 6.50% | 1 year to 5 years |
| IDFC First | 5.25% | 5.75% | 3 years 1 day to 5 years |
| Axis | 5.75% | 6.25% | 5 years to 10 years |
| ICICI | 5.50% | 6.00% | 5 years 1 day to 10 years |
| HDFC | 5.50% | 6.00% | 5 years 1 day up to 10 years |
| SBI | 5.40% | 6.20% | 5 years and up to 10 years |
| Kotak Mahindra | 5.25% | 5.75% | 5 years and up to 10 years |
| Bank of Baroda | 5.25% | 5.75% | Above 5 years and up to 10 years |
(Interest rates updated on 7th Oct 2021)
Click Here to view All Banks FD Rates 2021
Fixed Deposits by Small Finance Banks
Small Finance Banks are banks that provide banking services to un-served and underserved sections including small business units, small and marginal farmers, micro and small industries, and unorganized entities. Like all commercial banks, these banks can engage in other basic banking practices such as lending and accepting deposits.
| Name of the bank | 1 year | |
| Regular Customers | Senior Citizens | |
| Suryoday Small Finance Bank | 7.00% | 7.50% |
| Utkarsh Small Finance Bank | 6.75% | 7.25% |
| Equitas Small Finance Bank | 6.00% | 6.50% |
| Ujjivan Small Finance Bank | 6.5% | 7.00% |
| Jana Small Finance Bank | 6.75% | 7.25% |
| Fincare Small Finance Bank | 6.75% | 7.25% |
| AU Small Finance Bank | 6.00% | 6.50% |
*Interest rates updated on 7th Oct 2021.
Best FD Rates by NBFCs in India
| Company Name | Fixed Deposit Interest Rates (% p.a.) Max. |
| Muthoot Capital FD | 7.25% |
| Shriram Transport Finance FD | 7.48% |
| PNB Housing FD | 6.70% |
| Kerala Transport Development Finance Corporation (KTDFC) FD | 6.00% |
| Sundaram Finance Company FD | 5.80% |
| Mahindra Finance FD Scheme (MMFSL) | 6.45% |
| Bajaj Finserv FD | 6.50% |
| HDFC Ltd. FD | 6.40% |
| ICICI Home Finance FD | 6.45% |
| LIC Housing Finance FD | 5.75% |
(Interest rates updated on 7th Oct 2021. Rates are given for the cumulative option only and are offered fro regular citizens.)
To know more about Corporate/Company Fixed Deposits, Click Here
Please note: Unlike Fixed Deposits offered by Banks, there is no insurance for FDs from Non-Banking Financial Companies. Currently, Muthoot Capital, PNB Housing, and Shriram Transport are offering the highest fixed deposit interest rates (7.25%, 6.70% & 7.48% for regular citizens).
Therefore it becomes important for you, as an investor, to check the credit rating of the company. It should not be below average (look for a ‘Stable’ outlook, at the very least). You may use websites like CRISIL, ICRA and CARE to check the company’s FD rating.
Post Office Fixed Deposit Rates – 2021
Tenure | Rate of Interest* (p.a.) |
| 1 year | 5.5% |
| 2 years | 5.5% |
| 3 years | 5.5% |
| 5 years | 6.7% |
*Quarterly compounding; the aforementioned interest rates were effective from Q2 YY 2021 (July-Sep)
Fixed Deposit Interest Rates For Senior Citizens (Aged 60 years & above)
As you must have noticed in the above table, fixed deposit interest rates for senior citizens are higher than general FD rates. Such deposits are a suitable investment option for senior citizens with low and/or irregular incomes. However, to obtain a senior citizen account and take advantage of the perks, one must provide valid proof of age.
Things you should know:
- At the time of account opening, the senior citizen must be 60 years old or older.
- Most of the banks provide senior citizens FDs with tenure ranging from seven days to ten years.
- A senior citizen FD will give you a better interest rate of 0.25 per cent to 0.75 per cent than a normal FD.
- Loans can be taken out against a senior citizen’s FD.
How to choose the best Fixed Deposit in India?
Now that you have read about interest rates, here is a quick guide to help you choose the best-fixed deposit in 2021
- Compare the Interest Rates:
While choosing a fixed-term deposit plan, the first thing to do is compare the interest rates provided by various providers The interest rate is determined by several factors, including the size of the deposit, the candidate’s age, and the term selected.
Currently, small finance banks and private sector banks are providing the highest FD slab rates of 6.50% – 7.48% p.a., which is 1% – 1.5% higher than the highest FD slab rates provided by public sector banks and major private sector banks.
- Tenure and financial goals in mind:
You can deposit your money is an important aspect while choosing the best-fixed deposit scheme. Banks provide fixed deposits for tenure ranging from 7 days to 10 years. When deciding the FD tenure, you should consider liquidity and the time horizon of your financial objectives. If you ignore your financial objectives and close your FD accounts prematurely in the event of financial emergencies, the bank will levy a premature withdrawal penalty of up to 1% on the effective interest rate. This will lower the net interest on your deposit.
- Provider’s Credibility:
Several banks provide higher FD interest rates but might indicate some risk. It is always advisable to make deposits in scheduled banks and NBFCs that are certified by ICRA, CRISIL, etc.
Also, if you want to invest in Corporate Fixed Deposits, you should consider company funds based on the credit ratings on deposits provided. Company Deposits with high credit ratings (for instance: FAAA, FAA) are considered safe. These ratings indicate a degree of safety regarding the timely payment of deposit amount (principal) and interest.
- Check Penalty Rates:
In case of emergencies, you might have to make a partial withdrawal from your FD. When you do so, certain providers incur a steep penalty or reduce the interest rate. Hence, you must consider the penalty amounts before choosing the right fixed deposit.
- Choosing between Cumulative and Non-Cumulative FDs
Choose whether you like periodic returns or interest at maturity, depending on your financial targets. Non-cumulative FDs provide payouts weekly, quarterly, or semi-annually, making them ideal for senior citizens looking for steady income. On the other hand, cumulative fixed deposits allow you to compound your interest over time and receive your earnings at maturity. In addition, as opposed to their counterparts, cumulative fixed deposit deposits pay out higher interest rates.
- Process of Application
The application process differs from one FD provider to another. When choosing a provider, see if they have an online application process that allows you to open an FD from the comfort of your own home without having to go to a branch. It’s best to pick a provider that accepts applications both online and offline.
How to calculate interest on Fixed Deposit?
You can calculate the net interest you’ll receive after your term using the FD calculator.
There are two methods of calculation of interest on a fixed deposit, viz. Simple Interest and Compound Interest.
Simple Interest Formula: SI = P x R x T/ 100
Where,
- SI = Simple Interest
- P = Principal (amount invested)
- R = Rate of Interest (in %)
- T = Tenure (time for which deposit is kept in FD account)
For example, if a sum of Rs 10,000 is invested for 3 years at 10% interest rate per annum, then at the time of maturity,
SI = 10,000*10*3/100 = Rs 3,000 | Maturity Amount = Rs 13,000
Formula for Compound Interest: A = P (1+r/n) ^ (n * t)
Where,
- A = Maturity Amount
- P = Principal amount
- r = Rate of Interest (in decimals)
- n = number of compounding in a year
- t = number of years
For example, if a sum of Rs 10,000 is invested for 3 years at a 10% compound interest rate (quarterly compounding), then at the time of maturity,
A= 10,000 {1 + (0.1/4)} ^ (4 * 3)
A = 10,000 (1 + 0.025) ^ (12)
A = 10,000 (1.025) ^ (12) = Rs. 13,449 (approximately)
Compound Interest (CI) Earned over 3 years = Maturity Amount – Principal Amount
CI = 13,449 – 10,000 = Rs. 3,449
FAQs
What are the income tax benefits of investing in a fixed deposit?
On investing in a 5-year FD, you can claim up to Rs. 1.5 lakh as Deductions u/s 80 of the IT Act, 1961.
Is interest in FD taxable?
Yes, the interest on FD is fully taxable. The income earned is added to your total income and taxed as per your tax bracket. It is reflected under ‘Income from other sources in your ITR. Besides that, banks and NBFCs also deduct TDS on your interest income.
How to save tax on fixed deposit interests?
Submit Form 15G or Form 15H (for senior citizens) to your FD provider. This form needs to be submitted every year to avoid TDS. Please note that if your interest income is taxable but you instruct your FD provider against TDS, you will have to pay the same while filing the ITR.
Is FD a safe investment option?
Yes, an FD is a safe investment option for risk-averse investors who are seeking a stable investment avenue to grow their savings. You can get the best FD rates, flexible tenures, and select periodic payouts. You will also get guaranteed returns, without any effect of market fluctuations.
What are the premature withdrawal penalty charges for FD?
Banks and NBFCs charge a penalty of 0.5 % – 1% on premature withdrawals from FD accounts.
Can I take a loan against FD?
Loan against FD is an important feature of fixed deposits and thus most of the banks do offer this option to their customers. You can get a loan of up to 90% of the deposit amount (may vary as per your bank).
Can I prematurely withdraw a tax saving FD?
No. Tax saving fixed deposit comes with a lock-in period of 5 years. This can be prematurely liquidated in case of the death of the FD holder/primary account holder.
What is the minimum amount required to invest in a tax-saving FD?
You can start investing from Rs. 100 in a tax saving fixed deposit. However, most of the banks have kept Rs. 1,000 as the minimum deposit amount. It can go up to Rs. 1.5 lakh.
When is tax at source deducted on FD interest income?
If your fixed deposit interest income exceeds Rs 40,000 in a financial year, then your provider exercises TDS. For senior citizens, this limit is Rs 50,000. This can be avoided by submitting Form 15G/H. These limits are for bank fixed deposits or time deposits only.
10 Comments. Leave new
How can we check the CRISIL rating of Small Finance banks, NBFC’s and Corporate bonds for both Short and Long term
Hi Sanjay,
To check the CRISIL rating of a company, follow these steps:
1. Visit crisil.com
2. On the home page, enter the name of the company/bank
3. Hit the “View Rating” button.
4. If there is more than one company under a similar name, you will be shown a list.
5. Click on the link which shows the exact name of the company/bank you wish to check.
A Factsheet will be displayed. Look under the “Ratings” section and the “Outlook” section to check the current status.
Sir, I want to invest about 12 lakhs in small finnce banks equally. for 5 years. Now by D I C G C cover I can get my amount invested at present. , Please clarify while failure is governed by R B I is it possible that the repayment of amount invested includes interest earned also . eg My investment in a small finance bank is Rs 4 lacks @ 8% p.a for 4 years., After 2 years the bank fails. Will I get 4 lakhs or 4 lakhs -interest earned and whether the D I C G C cover is till the period of maturity of the deposit and incase the bank fails before the maturity when will I get the amount invested.
Hi Gopal,
DICGC covers both – the amount invested + the interest earned. BUT, the total should not be more than Rs. 5 lakh. Now, is you invest Rs. 4 lakh and earn interest of Rs. 50,000 on it, you will get compensation of Rs. 4.5 lakh. However, if the interest is, say, Rs. 1,10,000 and the bank defaults, you will get Rs. 5 lakh only. The remaining Rs. 10,000 will not be included in the cover.
This deposit insurance is active as long as your FD is active, i.e. till the maturity. If the bank defaults before maturity, you will get the compensation within the stipulated time. You will not have to wait for your FD to mature to get the compensation.
Therefore, we suggest that you invest Rs. 12 lakh in different banks. Break it into smaller portions, e.g. Rs. 3 lakh each and then invest. This way you can safeguard your interest the best.
You may read more about DICGC insurance here.
How do fixed deposit in finance company work? it is safe or not & is breaking FD before maturity available or not?
Like banks, companies also provide premature withdrawal facility but it comes with some penalty.
As far as safety is concerned, fixed deposits in companies carry some risk always. You cannot completely match it with FDs in scheduled banks. Deposits made in Non-Banking Financial Companies are not covered under the DICGC insurance, which makes it somewhat risky. To compensate for that, these companies generally offer higher interest rates than what banks have to offer. However, RBI keeps a track of these companies and regularly monitors their financial health to ensure the welfare of depositors.
It is advised to check the credit rating of any company that you are thinking of putting your money in. Do good research about the company’s background and the recent news surrounding it. This way, you can knit your safety net to a certain extent.
I have a question on the DICGC deposit insurace. I understand that deposits upto Rs. 5 Lakhs is covered. Is it Rs. 5 Lakh per account per bank or is it across all banks. For example, if one invests Rs. 5 L as FD in 3 different banks will the entire Rs. 15 Lakhs be covered or is the total limited to Rs. 5 Lakhs? Thanks, Brahmanya
Hi Brahmanya,
It’s a valid question. This deposit insurance will cover deposits up to Rs. 5 lakh in each bank. This includes all types of deposits held in the same bank. If you have deposits of Rs. 5 lakh each in 3 different banks, then all the 3 deposits will be covered separately.
Therefore, if all the 3 banks default, you will get a total of Rs. 15 lakh. However, note that if you have Rs. 2 lakh in 1st bank, Rs. 4.5 lakh in 2nd bank and Rs. 5.5 lakh in 3rd bank, then you will be paid a total of (2+4.5+5.5) Rs. 12 lakh because the limit is up to Rs. 5 lakh per bank.
For more information, click here.
what is the risk of investing in small bank fd as compare to big commercial psu bank pl?
Small finance banks are created to cater to the needs of the public in rural and semi-urban areas. These are listed scheduled banks under the RBI, thus the risk-factor is well-taken care of. FD made in small finance banks is covered under the DICGC deposit insurance of Rs. 5 lakh which is paid as compensation if the bank defaults. Therefore, the security part is not alarming. However, it is still suggested to do your research first, analyse your options and then go ahead with investing in small finance banks.