A fixed deposit (FD), also known as a 'time deposit' or 'term deposit,' is an investment where you can put your extra money away for a set period. During this time, you earn a fixed amount of extra money regularly or at the end. Many people like FDs because they give a sure income and protect your money. They're also good for saving for short-term goals or emergencies, or for retirement.
FD Interest Rates
Currently, the interest rates for fixed deposits (FDs) in scheduled banks from 2.50% per annum to 9.00% per annum for regular customers. These rates apply to deposit periods ranging from 7 days to 10 years. Small Finance Banks and Non-Banking Financial Companies (NBFCs) generally offer the highest FD interest rates. Next in line are Public Sector Undertaking (PSU) Banks and large Private Sector Banks. However, certain Private Sector Banks such as Bandhan Bank, DCB Bank, Tamilnad Mercantile Bank, RBL Bank, IDFC First Bank, IndusInd Bank, Yes Bank, SBM Bank, CSB Bank, and Federal Bank offer even higher interest rates for certain FD amounts compared to other Private Sector Banks.
Comparison of FD Interest Rates in India
| Small Finance Banks | ||||
|---|---|---|---|---|
| Bank Name | Interest Rates (% p.a.) | |||
| Highest slab | 1-year tenure | 3-year tenure | 5-year tenure | |
| AU Small Finance Bank | 8.00 | 6.75 | 7.50 | 7.25 |
| Capital Small Finance Bank Limited | 7.60 | 7.50 | 7.15 | 7.10 |
| Equitas Small Finance Bank | 8.50 | 8.20 | 8.00 | 7.25 |
| ESAF Small Finance Bank | 8.25 | 6.00 | 6.75 | 6.25 |
| Fincare Small Finance Bank | 8.61 | 7.65 | 8.11 | 8.00 |
| Jana Small Finance Bank | 8.50 | 8.50 | 7.25 | 7.25 |
| North East Small Finance Bank | 8.50 | 7.00 | 7.75 | 6.25 |
| Shivalik Small Finance Bank Limited | 7.80 | 7.80 | 7.50 | 6.50 |
| Suryoday Small Finance Bank | 8.65 | 6.85 | 8.60 | 8.25 |
| Ujjivan Small Finance Bank | 8.25 | 8.25 | 7.20 | 7.20 |
| Unity Small Finance Bank | 9.00 | 7.85 | 8.15 | 8.15 |
| Utkarsh Small Finance Bank | 8.50 | 8.00 | 8.50 | 7.50 |
| Private Sector Banks | ||||
| Bank Name | Interest Rates (% p.a.) | |||
| Highest slab | 1-year tenure | 3-year tenure | 5-year tenure | |
| Axis Bank | 7.20 | 6.70 | 7.10 | 7.00 |
| Bandhan Bank | 7.85 | 7.25 | 7.25 | 5.85 |
| City Union Bank | 7.00 | 6.75 | 6.50 | 6.25 |
| CSB Bank | 7.75 | 5.00 | 5.75 | 5.75 |
| DBS Bank | 7.50 | 7.00 | 6.50 | 6.50 |
| DCB Bank | 8.00 | 7.15 | 7.60 | 7.40 |
| Dhanlaxmi Bank | 7.25 | 6.75 | 6.50 | 6.60 |
| Federal Bank | 7.50 | 6.80 | 7.00 | 6.60 |
| HDFC Bank | 7.25 | 6.60 | 7.00 | 7.00 |
| ICICI Bank | 7.10 | 6.70 | 7.00 | 7.00 |
| IDBI Bank | 7.25 | 6.80 | 6.50 | 6.50 |
| IDFC First Bank | 7.75 | 6.50 | 7.25 | 7.00 |
| IndusInd Bank | 7.75 | 7.75 | 7.25 | 7.25 |
| Jammu & Kashmir Bank | 7.10 | 7.10 | 6.50 | 6.50 |
| Karnataka Bank | 7.25 | 6.95 | 6.50 | 6.50 |
| Karur Vysya Bank | 7.50 | 7.00 | 7.00 | 7.00 |
| Kotak Mahindra Bank | 7.25 | 7.10 | 7.00 | 6.20 |
| Nainital Bank | 7.05 | 6.70 | 6.25 | 5.75 |
| RBL Bank | 8.10 | 7.50 | 7.50 | 7.10 |
| SBM Bank India | 8.25 | 7.05 | 7.30 | 7.75 |
| South Indian Bank | 7.40 | 6.70 | 6.60 | 6.00 |
| Tamilnad Mercantile Bank | 7.25 | 7.00 | 6.50 | 6.50 |
| Yes Bank | 7.75 | 7.25 | 7.25 | 7.25 |
| Public Sector Banks | ||||
| Bank Name | Interest Rates (% p.a.) | |||
| Highest slab | 1-year tenure | 3-year tenure | 5-year tenure | |
| Bank of Baroda | 7.25 | 6.85 | 7.25 | 6.50 |
| Bank of India | 7.25 | 6.50 | 6.50 | 6.00 |
| Bank of Maharashtra | 7.00 | 6.50 | 6.25 | 6.00 |
| Canara Bank | 7.25 | 6.85 | 6.80 | 6.70 |
| Central Bank of India | 7.25 | 6.75 | 6.50 | 6.25 |
| Indian Bank | 7.25 | 6.10 | 6.25 | 6.25 |
| Indian Overseas Bank | 7.10 | 6.90 | 6.50 | 6.50 |
| Punjab & Sind Bank | 7.40 | 6.20 | 6.00 | 6.00 |
| Punjab National Bank | 7.05 | 6.75 | 7.00 | 6.50 |
| State Bank of India | 7.10 | 6.80 | 6.75 | 6.50 |
| UCO Bank | 6.50 | 6.50 | 6.30 | 6.20 |
| Union Bank of India | 7.25 | 6.75 | 6.50 | 6.50 |
Fixed deposit rates as of 19 February 2024
Fixed Deposit Rates – Tax Saving FD
Fixed deposit rates as of 19 February 2024
FD Interest Rates of Leading Foreign Banks
| Bank Name | Interest Rates (p.a.) | |||
|---|---|---|---|---|
| Highest slab (%) | 1-year tenure (%) | 3-year tenure (%) | 5-year tenure (%) | |
| Deutsche Bank | 8.00 | 7.00 | 8.00 | 7.50 |
| HSBC Bank | 7.25 | 4.00 | 7.00 | 6.00 |
| Standard Chartered Bank | 7.50 | 7.15 | 7.10 | 6.75 |
Fixed deposit rates as of 19 February 2024
Company/Corporate Fixed Deposit Rates
| Company Name | Interest Rates (p.a.) | Tenure range | Additional interest rate for senior citizen (p.a.) | ||
|---|---|---|---|---|---|
| 1-year tenure | 3-year tenure | 5-year tenure | |||
| Bajaj Finance Limited | 7.40% | 8.05% | 8.05% | 12-60 months | 0.25% |
| ICICI Home Finance | 7.25% | 7.65% | 7.60% | 12-120 months | 0.25% |
| Kerala Transport Development Finance Corporation | 7.00% | 7.00% | 6.75% | 12-60 months | 0.25% |
| LIC Housing Finance Ltd. | 7.25% | 7.75% | 7.75% | 12-60 months | 0.25% |
| Mahindra Finance | 7.60% | 8.05% | 8.05% | 12-60 months | 0.25% |
| Manipal Housing Finance Syndicate Ltd. | 8.25% | 8.25% | 7.75% | 12-60 months | - |
| Muthoot Capital Services Limited | 7.21% | 8.07% | 8.38% | 12-60 months | 0.25% |
| PNB Housing Finance Ltd. | 7.45% | 7.85% | 7.65% | 12-60 months | 0.25% |
| Shriram Finance Ltd.* | 7.53% | 8.18% | 8.27% | 12-60 months | 0.50% |
| Sundaram Home Finance | 7.45% | 7.75% | 7.90% | 12-60 months | 0.50% |
| Sundaram Finance | 7.45% | 7.75% | - | 12 to 36 months | 0.35% |
*At Monthly Rests. Additional interest of 0.25% p.a. is ap
Types of Fixed Deposit
- Standard Fixed Deposit can be opened by Resident Indians, Sole Proprietorship Firms, Partnership Firms, Limited Companies, Hindu Undivided Families, etc. Its interest rates are usually higher than the savings account interest rates.
- Tax-saving Fixed Deposit can be opened by Resident Individuals and Hindu Undivided Families only. It allows depositors to claim tax deduction of up to Rs. 1.5 lakh on the principal component under Section 80C. It also has a lock-in period of 5 years.
- Floating Rate Fixed Deposit has its interest rate linked to a reference rate, like the RBI’s Repo Rate and T-Bill Rate. Thus, its returns depend on the movement in the reference rate.
- Flexi Fixed Deposit allows depositors to link their FDs with their savings or current account. In case of fund deficit in the linked savings or current account, the linked deposit amount can be partially broken and the remaining deposit amount will continue to earn the FD interest rate. It offers higher liquidity and flexibility than normal FDs and higher interest rates than regular savings accounts.
- Senior Citizen Fixed Deposit can be opened by individuals aged 60 years and above. Interest rates offered on this scheme are usually 50 bps higher than regular FD rates. Some banks/ NBFCs under special schemes and for specific tenures also offer additional interest rates of 0.2%- 0.3% over and above the senior citizen FD rates. Additionally, some banks/ NBFCs also offer additional interest rates to super seniorcitizens (age 80 years and above).
- Corporate Fixed Deposit is offered by Housing Finance Companies (HFCs) and Non-Banking Financial Companies (NBFCs) and usually has interest rates higher than bank FD rates.
- Cumulative Fixed Deposit gives you the benefit of compounding by adding the interest earnings added to the principal amount, giving you the benefit of compounding.
- In Non-cumulative Fixed Deposit, the interest earned on the investment amount is payable at regular intervals, i.e., monthly, quarterly, half-yearly or annually.
- NRE (Non-Resident External) Deposits is for Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) who wish to deposit their foreign earnings.
- NRO (Non-Resident Ordinary) Deposit is for NRIs and PIOs who want to deposit their income earned through Indian sources.
- FCNR (Foreign Currency Non-Resident) Deposit is for NRI and PIO customers who want to deposit their funds generated/earned overseas.
- RFC (Resident Foreign Currency) Deposit allows NRIs and PIOs, who after being a resident outside India for a year or more are returning to India, to open fixed deposits in foreign currencies with banks in India. The primary objective is to allow such depositors to earn higher returns, without any exchange rate risk. These deposits can only be opened with funds generated/earned overseas in foreign currencies.
- Callable Fixed Deposit allows depositors to withdraw their fixed deposit before it reaches maturity. However, depositors might have to pay a penalty on pre-closing this type of FDs.
- Non-callable Fixed Deposit is opposite to Callable Fixed Deposits in a sense that the depositors can withdraw their investments only at maturity. Also, the interest rates offered on non-callable FDs are usually higher than the interest rates offered on callable FDs.
Features of Fixed Deposit
- Low Deposit Amount: The minimum deposit amount required to book an FD is Rs 100, which may vary across banks and NBFCs.
- Fixed Tenure: Choose FD tenure anywhere from 7 days to 10 years.
- Fixed Interest Rates: The interest rates remain same till the maturity or renewal of the FD. However, some banks also offer floating fixed deposit schemes wherein the FD rates are linked to external benchmark and thus, may change as per the movements in the linked rates. For instance, the FD rates SBI offers Floating Rate Bulk Term Deposit scheme wherein the FD rates are linked to repo rate.
- Multiple Interest Payout Options: Choose from multiple interest payout options at monthly, quarterly, half-yearly or yearly frequency or opt for cumulative option wherein the interest earned on the principal is reinvested to give you the benefit of compounding.
- Premature Withdrawal: Premature withdrawal is allowed, subject to penal interest rates
- Loan against FD: Leverage FDs to avail loans while earning interest on the pledged FDs.
Benefits of Fixed Deposit (FD)
- Guaranteed returns
- Up to Rs 5 lakh insured under DICGC
- Tax benefit of up to Rs 1.5 lakh under Section 80C on opening tax-saving FDs
- Use as collateral to avail loan or secured credit cards
Eligibility Criteria for Fixed Deposit
- Residents
- Hindu Undivided Families (HUFs)
- Sole Proprietorship Firms
- Partnership Firms
- Limited Companies
- Trust Accounts, etc.
Documents Required to Open a Fixed Deposit (FD)
Usually, customers book FD in the bank where they already maintain a bank account. As banks already have the KYC details of their existing customers, new documents might not be needed to open a fixed deposit account.
- Aadhaar Card,
- PAN Card,
- Driver’s License,
- Passport, etc.
How to Open Fixed Deposit Online?
Customers can open a fixed deposit account online through the bank’s net banking platform or through its mobile application such as YONO SBI.
How to Open Fixed Deposit Offline?
To open a fixed deposit offline, customers can visit the banks and financial institutions where they already maintain their bank accounts.
How to Choose the Right Fixed Deposit?
To choose the right fixed deposit scheme, know your investment horizon and liquidity requirements. When making the choice, consumers should also compare prevailing FD interest rates across banks and check for interest pay-out options, special interest schemes and additional facilities such as secured credit cards, loan against FD, sweep-in and sweep-out facility, etc.
Frequently Asked Questions (FAQs)
1. Why should I invest in FD?
Reasons to investment in FD are as below:
- Guaranteed returns on investment
- Up to Rs 5 lakh insured under DICGC
- Tax benefit of up to Rs 1.5 lakh under Section 80C available only on tax-saving FDs
- Use as collateral to avail credit card and loan
2. How do I choose a fixed deposit?
When choosing a fixed deposit scheme, factor in your liquidity, investment objective, investment horizon, current FD interest rates and interest pay-out options. Additionally, check for special interest schemes and additional facilities such as secured credit cards, loan against FD, sweep-in and sweep-out facility, etc.
3. Who can invest in an FD scheme in India?
Resident individuals, private and public limited companies, Hindu Undivided Families (HUF), partnership firms, societies, governments, local bodies, etc. can book fixed deposits.
4. What are the minimum and maximum terms of Fixed Deposit schemes?
The tenure of FD schemes usually varies from 7 days to as long as 10 years. However, NBFCs offer Fixed Deposit investment for a period ranging from 12 months to 60 months and HFCs offer Fixed Deposit tenures of 12 months to 120 months of fixed deposits.
5. What is the minimum lock-in period for a tax-saving FD?
Tax-saving fixed deposit schemes have a lock-in period of 5 years.
6. Is the interest earned on a fixed deposit taxable?
Yes. The interest earned on an FD is taxable. However, as per the Section 80C of the Income Tax Act, 1961, investors can claim deductions for up to Rs. 1.5 lakh per financial year.
7. What is the FD interest rates for senior citizens for fixed deposits?
Most of the banks provide senior citizens with preferential FD rates (e.g., 0.50% extra). For banks like Axis Bank, preferential interest rates are awarded at different proportions for select tenure.
8. What is the minimum deposit amount allowed for opening an FD?
The minimum amount set by banks and NBFCs for opening a fixed deposit is generally set at Rs. 1,000. Public sector banks may have lower minimum deposit criteria while some large private sector banks have set minimum deposit requirement of Rs 5,000. However, a tax-saving 5-year fixed deposit can be opened with an amount as low as Rs. 100.
9. How much tax is deducted on FD interest income?
TDS @10% is levied on interest income of more than Rs. 40,000 for regular individuals and Rs. 50,000 for senior citizens. For Company/Corporate Fixed Deposits, this limit has been set at Rs. 5,000.
10. Is it compulsory to submit a PAN to open an FD?
Yes. It is compulsory to quote your PAN when applying for a fixed deposit. However, if you do not have a PAN, you need to submit duly filled Form 60/61 (not being a company or a firm).
11. Is it safe to open Fixed Deposit in small finance banks?
Yes. Small finance banks are regulated by the Reserve Bank of India. Also, deposit insurance of up to Rs. 5 lakh by DICGC is provided on these fixed deposits.
12. What is NRE fixed deposit?
The full form of NRE Fixed Deposit is Non-Resident External Fixed Deposit. This Fixed Deposit is for Non-Resident Indians (NRIs). They can deposit their foreign earnings in an Indian Account. Interest earned on an NRE FD is not taxable in India. The account is maintained in INR which means that the money deposited is converted as per the later forex rates.
13. What is the difference between NRE FD and NRO FD?
NRE Fixed Deposit (Non-Resident External) is for NRIs to remit/transfer their foreign earnings to an Indian account. NRO Fixed Deposit (Non-Resident Ordinary) is for NRIs to manage their income earned in India.
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