Fixed deposits (FDs) are one of the safest and most reliable investment options, especially for individuals seeking guaranteed returns with minimal risk. In 2024, several banks in India are offering competitive FD interest rates, with some providing as high as 7.85% for general citizens and even more for senior citizens.
This article will explore the best FD rates in India, comparing offerings from major banks and small finance banks. We’ll also discuss how to choose the right FD, tax implications, risks, digital FD options, auto-renewal benefits, and tips for maximizing returns.
Fixed Deposit Rates
| Bank Name | Tenure | General Citizens Rate | Senior Citizens Rate |
|---|---|---|---|
| HDFC Bank | 2 years 11 months | 7.35% | 7.85% |
| ICICI Bank | 15 to 18 months | 7.25% | 7.85% |
| Kotak Mahindra Bank | 390 to 391 days | 7.40% | 7.90% |
| Federal Bank | 444 days | 7.50% | 8.00% |
| Bank of Baroda | 2 to 3 years | 7.15% | 7.65% |
| Union Bank of India | 456 days | 7.30% | 7.80% |
Fixed Deposits continue to be one of the safest investment options in India, offering guaranteed returns with minimal risk. While major banks provide FD interest rates up to 7.85%, small finance banks offer even higher returns. However, before investing, compare interest rates, tax implications, and premature withdrawal policies to ensure the best returns on your savings.
What is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is a financial instrument offered by banks and NBFCs where you deposit a lump sum amount for a fixed tenure at a predetermined interest rate. At maturity, you receive the principal along with the accrued interest.
Why Choose Fixed Deposits?
- Guaranteed Returns – No risk of market fluctuations.
- Higher Interest than Savings Accounts – Generally 2-3% higher.
- Flexible Tenure – From 7 days to 10 years.
- Safe Investment – Covered by DICGC insurance up to ₹5 lakh.
Highest FD Interest Rates in India (March 2024)
Besides major banks, small finance banks offer even higher FD rates:
| Small Finance Bank | Tenure | General Citizens Rate | Senior Citizens Rate |
| Suryoday SFB | 25 months | 9.01% | 9.25% |
| Ujjivan SFB | 15 months | 8.50% | 9.00% |
| Equitas SFB | 888 days | 8.50% | 9.00% |
Caution: Small finance banks provide high interest but may have stricter withdrawal policies.
How to Choose the Right FD?
1. Compare Interest Rates
Check FD interest rates across different banks and tenures. Opt for banks offering higher returns while maintaining credibility.
2. Consider Tax Implications
Interest earned on FDs is taxable under Income Tax Act, 1961. If you earn more than ₹40,000 (₹50,000 for seniors) in a year, TDS at 10% applies.
3. Look for Special FD Schemes
Banks occasionally launch special FDs with higher interest rates for a limited period.
4. Understand Premature Withdrawal Rules
Most banks impose a penalty of 0.5% – 1% on premature withdrawals. Some banks offer sweep-in FDs, which provide partial liquidity.
5. Consider Senior Citizen Benefits
Senior citizens (above 60 years) receive additional 0.5% interest in most banks.
Digital Fixed Deposits: A Convenient Option
Several banks now offer Digital Fixed Deposits, which allow customers to open an FD completely online without needing a savings account in the bank. Popular banks offering this include ICICI Bank, Axis Bank, and SBI.
Advantages of Digital FD:
- Easy Account Setup – Open an FD online in minutes.
- Paperless Transactions – No need to visit a branch.
- Higher Interest Rates – Some banks offer better rates for digital FDs.
FD Auto-Renewal: Should You Opt for It?
Auto-renewal allows your FD to be automatically renewed upon maturity for the same tenure. While convenient, it may not always be the best option, as interest rates may vary. It’s best to review interest rates at maturity before reinvesting.
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Tax-Saving Fixed Deposits
A Tax-Saving FD allows you to claim deductions up to ₹1.5 lakh under Section 80C. However, these come with a 5-year lock-in period and no premature withdrawal option.
FAQs About Fixed Deposit Rates
1. Which bank gives the highest FD interest rate in India?
Currently, Suryoday Small Finance Bank offers the highest FD rate of 9.01% for general citizens.
2. Can I withdraw my FD before maturity?
Yes, but banks may charge a penalty of 0.5% – 1% for premature withdrawals.
3. Are fixed deposits taxable?
Yes. If your annual interest income exceeds ₹40,000 (₹50,000 for seniors), TDS of 10% is deducted.
4. Is FD better than mutual funds?
FDs are safer but offer lower returns. Mutual funds provide higher returns but involve market risk.
5. What is the maximum tenure for an FD?
You can open an FD for a maximum of 10 years.
