All about Fixed Deposits : Banks with highest Interest Rates

Fixed deposits (FDs) are secure investment instruments offered by Banks, Non-Banking financial companies (NBFCs) and post offices in India. It is a risk free investment and offers guaranteed returns. FD earns better rates than saving accounts. In FDs, investor invests in lump sum and at the end of the tenure; principle along with interest is paid back to the depositor cumulatively. Investor can also choose payment schedule in various frequencies such as monthly, quarterly or yearly. Fixed deposit interest rates vary according to the tenor of a fixed deposit. The duration of deposit may vary from 1 day to 10 years.  

Rate of Interest on will vary by the amount of deposits, tenure and type of depositor (senior citizen / non senior citizen).

Deposit Amount: Banks offer lower interest rate on bulk deposits of more than Rs 1 Crore and better rates for deposits of less than Rs 1 Crore

Deposit Tenure: Banks offer lower rate of interest on deposits with a shorter tenure. Usually highest rate is given on 5 years and above FDs

Depositor Type: All banks in India offer higher interest on senior citizens FDs. Generally it is observed that senior citizen rate is 0.25 %-.75% more than normal FD. 

Key features 

• Fixed Deposit can be opened by all Indians, including minors, HUFs and NRI. Note NRI can only open an NRO account jointly with Indian resident citizen. NRE fixed accounts cannot be done.
• Multiple nominees can be selected while doing investment.
• A premature withdrawal is allowed from FD but with interest penalty.
• Loan can be availed against fixed deposits to meet any financial emergency. Rate of interest on FD loans are usually 1%-1.5% higher than your FD rate.

Pre Mature withdrawal of FDs

It means withdrawing the entire investment before its maturity. The withdrawal rules may vary from one bank to another and some bank may levy a penalty at the time of breaking your FD before attaining the maturity. Bank will pay principal amount along with interest rate applicable for the period of your holding. There are some exceptions such as Yes Bank and IDFC Bank which don’t levy penalty for premature withdrawal. 

Tips to choose best bank FD rate scheme

• Analyze your expenses for near to medium term and decide on surplus. There is no point in investing in FD and then withdrawing in near future.
• Consider the broad economic factors and interest rates trends. Suppose there is chance that interest rates may go up in couple of quarters, then invest in FD with commensurate duration so that when rates go up you can benefit  
• Evaluate and compare factors such as interest rates for different tenures, penalty for breaking FD before maturity date before choosing the fixed deposit and FD bank.

 Income tax on Fixed Deposit

Interest on FD is taxed at marginal tax rate which is applicable to the depositor. Hence, for a person in 30% bracket, the post tax return on a FD that earns 8% interest may work out to just 5.6% only.

One point to be noted here is that interest income on FD’s is taxed on accrual basis. Let’s explain this with example; Mr Ajay deposited Rs. 100,000 at 8% for 5 years on 1st April 2018. The first year interest accrued on this FD comes to Rs. 8000 (considering yearly interest). Note Mr Ajay hasn’t actually received this interest yet but he needs to pay tax on the accrued interest as per his tab bucket.

In case the interest earned by a depositor on fixed deposits with all branches of a bank in a year exceeds Rs. 10,000, interest income will be subject to 10.3% tax deduction at source (TDS). In absence of PAN this amount rises to 20.6%. Also, you can claim credit for TDS only if your PAN is recorded with the bank.

Types of FD

Regular FD

Deposits made for a fixed time period with the bank comes under this category and rate of interest depends on your deposit amount and tenure

Tax saving FD

This FD promotes long term saving and allows the depositor to claim deduction on interest earned of FD under Section 80C of Income Tax Act. The deduction limit is Rs. 1, 50, 000. Key Features of Tax Savings FD are:

• Money deposited in this FD has a lock-in-period of a minimum of 5 years
• Premature withdrawal is not allowed
• Interest earned on tax savings FD are exempted under Section 80 C of Income Tax Act up to a maximum limit of Rs. 1.5 lakh

Some of the tax saving FDs offered by leading banks are as follows:

Bank	Interest Rate offered
Axis Bank	7.35%
Bank of Baroda	6.85%
HDFC Bank	7.40%
ICICI Bank	7.25%
IDBI Bank	7.05%
Kotak Bank	7.30%
PNB	6.75%
State Bank of India	6.85%

Frequently Asked Questions

What is the minimum / maximum amount that can be deposited into a FD account?

While few bank offer minimum amount of Rs. 100 for FD account, generally minimum amount is Rs 1000. Refer to individual bank site or visit branch to know more. There is usually no cap on maximum amount one can deposit.

What are the documents required for opening FD?

• Identity proof
• Address proof
• Age proof (for senior citizens)

Do senior citizens get higher rates?

Yes, senior citizens get 0.25% to 0.75 % more than normal interest rates interest rates on their FD.

What is the minimum and maximum tenure in FD?

You can open a fixed deposit account from minimum 1 day to maximum 10 years.

How about taxation?

Interest earn is taxable as per depositor normal tax slab. Another important point is of TDS. The interest earned on FD in a financial year exceeds Rs. 10,000; TDS is applicable on the credited interest. A depositor may furnish Form 15G / 15H to avail exemption from paying tax on his interest income.

Who can invest in FD schemes?

Resident Individuals, HUFs, NRIs, Firms, and Charitable Trusts can invest

Can I withdraw before the maturity date?

FD can be closed before its original maturity term. Some banks may levy a penalty on premature withdrawal

Can I take loan against fixed deposits?

Yes, banks generally provides loan on your FD up to the extent of 75-90%.

What about auto renewal facility while opening a FD?

Depositors can opt for an auto renewal facility at the time of opening the FD account or prior to its maturity.

FD Rates for less than one year

Bank Name	Tenure	Interest Rate
Axis Bank	6 months to 8 months 29 days	6.25%
Bank of Baroda	91 days to 180 days	5.50%
HDFC Bank	46 days to 6 months	5.75%
ICICI Bank	61 days to 184 days	6%
IDFC Bank	91 days to 180 days	6.75%
Kotak Mahindra Bank	181 days to 363 days	6.50%
State Bank of India	180 days to 210 days	6.35%

Top Banks with highest interest rates  

Bank Name	Tenure	Interest Rate
Yes Bank	7 days to 10 years	5%-7%
Axis Bank	7 days to 10 years	3.5%-6.9%
State Bank of India	7 days to 10 years	5.75%-6.75%
Bank of Baroda	7 days to 10 years	4.25% to 6.6%
Central Bank of India	7 days to 10 years	4.75%-6.5%
ICICI Bank	7 days to 10 years	4%-6.5%
Bank of India	7 days to 10 years	5.25%-6.25%
Canara Bank	7 days to 10 years	4.2%-6%
HDFC Bank	7 days to 10 years	3.5%-6%

Top Banks with highest interest rates for senior citizens 

     

Bank Name	Tenure	Interest Rate
Yes Bank	7 days to 10 years	5.5%-7.5%
Axis Bank	7 days to 10 years	3.5%-7.15%
State Bank of India	7 days to 10 years	6.25%-7.25%
ICICI Bank	7 days to 10 years	4.5%-7.25%
Bank of Baroda	7 days to 10 years	4.75% to 7.1%
Central Bank of India	7 days to 10 years	5.25%-7%
Bank of India	7 days to 10 years	5.25%-6.75%
Canara Bank	7 days to 10 years	4.7%-6.5%
HDFC Bank	7 days to 10 years	4%-6.5%

Here are details of FD rates along with tenure for top 5 Indian Banks

These rates are taken from respective bank websites and applicable to deposits below Rs 1 Crore

State Bank of India

Maturity period
	General public	Senior citizen
7 days to 45 days	5.75%	6.25%
46 days to 179 days	6.25%	6.75%
180 days to 210 days	6.35%	6.85%
211 days to less than 1 year	6.4%	6.9%
1 year to less than 2 year	6.7%	7.2%
2 years to less than 3 years	6.75%	7.25%
3 years to less than 5 years	6.8%	7.3%
5 years and up to 10 years	6.85%	7.35%

ICICI Bank

Maturity Period	General Public
7 days to 14 days	4.00%
15 days to 29 days	4.25%
30 days to 45 days	5.50%
46 days to 60 days	6.00%
61 days to 90 days	6.25%
91 days to 120 days	6.25%
121 days to 184 days	6.25%
185 days to 289 days	6.50%
290 days to less than 1 year	6.75%
1 year to 389 days	6.90%
390 days upto  2 years	7.10%
2 years 1 day upto 3 years	7.50%
3 years 1 day upto 5 years	7.25%
5 years 1 day upto 10 years	7.00%
5 years (80C FD)	7.25%

HDFC Bank

Maturity Period	General public	Senior citizen
7 - 14 days	3.50%	4.00%
15 - 29 days	4.25%	4.75%
30 - 45 days	5.75%	6.25%
46 - 60 days	6.25%	6.75%
61 - 90 days	6.25%	6.75%
91days - 6 months	6.25%	6.75%
6 months 1 day- 6 months 3 days	6.75%	7.25%
6 months 4 days	6.75%	7.25%
6 months 5 days- 9 months	6.75%	7.25%
9 months 1 day- 9 months 3 days	7.10%	7.60%
9 months 4 days	7.10%	7.60%
9 months 5 days - 9 months 15 days	7.10%	7.60%
9 months 16 days	7.10%	7.60%
9 months 17 days < 1 Year	7.10%	7.60%
1 Year	7.30%	7.80%
1 year 1 day - 1 year 3 days	7.30%	7.80%
1 year 4 days	7.30%	7.80%
1 year 5 days - 1 Year 15 Days	7.30%	7.80%
1 Year 16 days	7.30%	7.80%
1 year 17 days - 2 Years	7.30%	7.80%
2 years 1day - 2 Years 15 days	7.40%	7.90%
2 Years 16 days	7.40%	7.90%
2 years 17 days - 3 Years	7.40%	7.90%
3 years 1day - 5 years	7.25%	7.75%
5 Years 1 Day - 8 Years	6.50%	7.00%
8 Years 1 Day - 10 Years	6.50%	7.00%

PNB Bank

Maturity Period	General public	Senior citizen
7 to 14 days	5.7%	6.2%
15 to 29days	5.7%	6.2%
30 to 45 days	5.7%	6.2%
46 to 90 days	6.35%	6.85%
91 to 179 days	6.35%	6.85%
180 days to 270 Days	6.35%	6.85%
271 days to less than 1 year	6.35%	6.85%
1 year	6.75%	7.25%
555 days**	6.85%	7.35%
above 1 year - up to 3 years	6.75%	7.25%
above 3 year - up to 5 years	6.25%	6.75%
above 5 years - up to 10 years	6.25%	7.27%

Bank of Baroda

Maturity Period	General public	Senior citizen
7 days to 14 days	4.50%	4.75%
15 days to 45 days	4.75%	5.00%
46 days to 90 days	5.00%	5.25%
91 days to 180 days	5.75%	6.00%
181 days to 270 days	6.50%	6.75%
271 days & above and less than 1 year	6.50%	6.75%
1 year	6.70%	7.2%
Above 1 year to 400 days	6.85%	7.35%
Above 400 days and upto 2 Years	6.80%	7.3%
Above 2 Years and upto 3 Years	6.70%	7.2%
Above 3 Years and upto 5 Years	6.70%	7.2%
Above 5 Years and upto 10 Years	6.70%	7.2%

Post office Rates

Maturity Period	General public
1 year account	6.9%
2 year account	7%
3 year account	7.2%
4 year account	7.8%

Note : Post Office runs separate saving scheme for senior citizens called as Senior Citizen Saving Scheme. Click on link to read article.

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