Interest rates on fixed deposits (FDs) are crucial to determining how much an individual can earn on a lump sum parked for a certain lock-in period or maturity tenor. The investment instrument has financially supported many individuals, helping them earn interest to meet their mid-term goals.
As of Aug. 9, 2024, lending institutions are offering a maximum of 7.55% interest on fixed deposits up to INR 3 crore for a tenure of up to three years, 7.40% for five years, and up to 7% for ten years. Remember, senior citizens earn an extra 0.50% to 0.75% interest rate on FD investments than others.
There are also tax-saving fixed deposits that help taxpayers claim deductions every financial year under Section 80C of the Income Tax Act 1961.
Forbes Advisor India has put together interest rates on fixed deposit schemes provided to general and senior citizens by major scheduled banks of India for deposits up to INR 3 crore and maturity tenors of up to 10 years. You can also check the rate of interest on tax-saving fixed deposits.
The interest rate on fixed deposits is accurate as of Aug. 9, 2024.
Fixed Deposit Interest Rates of Public Sector Banks (Up To INR 3 Cr)
Company | RoI up to 3 years | RoI up to 5 years | RoI for 10 years | Senior Citizen - RoI |
---|---|---|---|---|
Bank of Baroda (Callable) | 7.15% | 6.50% | 6.50% | Up to 50 bps extra |
Bank of India | 6.75% | 6.50% | 6% | Up to 50 bps extra |
Bank of Maharashtra | 6.50% | 6.50% | 6.50% | Up to 50 bps extra |
Canara Bank (Callable) | 6.85% | 6.80% | 6.70% | Up to 50 bps extra |
Central Bank of India | 7% | 6.75% | 6.50% | Up to 50 bps extra |
Indian Overseas Bank | 6.80% | 6.50% | 6.50% | Up to 50 bps extra |
Punjab and Sind Bank | 6.30% | 6% | 6.25% | Up to 50 bps extra |
Punjab National Bank | 7% | 6.50% | 6.50% | 50 to 80 bps extra |
State Bank of India | 7% | 6.75% | 6.50% | Up to 50 bps extra |
UCO Bank | 6.30% | 6.20% | 6.10% | Up to 50 bps extra |
The interest rates on fixed deposits up to INR 3 crore provided to general and senior citizens by public sector banks are updated as of Aug. 9, 2024. While we update this information regularly, banks may have revised the interest rate on fixed deposits since the page was last updated.
Fixed Deposit Interest Rates of Private Sector Banks (Up To INR 3 Cr)
Company | RoI up to 3 years | RoI for 5 years | RoI for 10 years (%) | Senior Citizen - RoI |
---|---|---|---|---|
Axis Bank | 7.10% | 7.10% | 7% | Up to 50 bps extra |
Bandhan Bank (Bulk Deposit) | 6.75% | 6.15% | 5% | Up to 50 bps extra |
CSB Bank | 5.75% | 5.75% | 6% | Up to 50 bps extra |
City Union Bank | 6.50% | 6.25% | 6.25% | Up to 25 bps extra |
DCB Bank | 7.55% | 7.40% | 7.25% | Up to 50 bps extra |
Federal Bank | 7.05% | 7% | 6.60% | Up to 50 bps extra |
HDFC Bank | 7% | 7% | 7% | Up to 50 bps extra |
ICICI Bank | 7% | 7% | 6.90% | Up to 50 bps extra |
IDBI Bank | 7% | 6.50% | 6.25% | Up to 50 bps extra |
IDFC First Bank | 7.25% | 7% | 7% | Up to 50 bps extra |
Jammu and Kashmir Bank | 7% | 6.50% | 6.50% | Up to 50 bps extra |
IndusInd Bank (Callable) | 7.25% | 7.25% | 7% | Up to 50 bps extra |
Karnataka Bank | 6.50% | 6.50% | 5.80% | Up to 40 bps extra |
Karur Vysya Bank | 7% | 7% | 6.25% | Up to 40 bps extra |
Kotak Mahindra Bank | 7.15% | 7% | 6.20% | Up to 50 bps extra |
RBL Bank | 7.50% | 7.10% | 7% | Up to 50 bps extra |
South Indian Bank | 6.70% | 6.70% | 6% | Up to 50 bps extra |
Tamilnad Mercantile Bank | 6.75% | 6.50% | 6.50% | Up to 50 bps extra |
The interest rates on fixed deposits up to INR 3 crore provided to general and senior citizens by private sector banks are updated as of Aug. 9, 2024. While we update this information regularly, banks may have revised the interest rate on fixed deposits since the page was last updated.
Fixed Deposit Interest Rate of Small Finance Banks (Up To INR 3 Cr)
Company | RoI up to 3 years | RoI for 5 years | RoI for 10 years | Senior Citizen RoI |
---|---|---|---|---|
AU Small Finance Bank | 7.50% | 7.25% | 7.25% | Up to 50 bps extra |
Capital Small Finance Bank | 7.15% | 7.15% | 7.10% | Up to 50 bps extra |
Equitas Small Finance Bank | 8% | 7.25% | 7.25% | Up to 50 bps extra |
Suryoday Small Finance Bank | 8.60% | 8.25% | 7.25% | Up to 50 bps extra |
Jana Small Finance Bank | 8.35% | 7.35% | 6.60% | Up to 50 bps extra |
North East Small Finance Bank | 9% | 8% | 6.25% | Up to 75 bps extra |
The interest rates on fixed deposits up to INR 3 cr provided to general and senior citizens by small finance banks are updated as of Aug. 9, 2024. While we update this information regularly, banks may have revised the interest rate on fixed deposits since the page was last updated.
Tax Saver FD Interest Rates
Company | RoI up to 5 years | RoI up to 10 years | Senior Citizen RoI - 5 to 10 years |
---|---|---|---|
Baroda Tax Savings Fixed Deposit | 6.50% | 6.50% | 7.15% to 7.50% |
Canara Tax Saver Deposit Scheme | 6.70% | - | Up to 60 bps extra |
IOB Tax Saver Deposit Scheme | 6.50% | - | - |
PNB Tax Saver Deposit Scheme | 6.50% | 6.50% | Up to 7% |
Bandhan Bank Tax Saver FD | 7% | - | 7.50% |
CSB Domestic Tax Saving Deposit | 5.75% | - | - |
City Union Bank Tax Saver Scheme | 7.10% | - | 7.10% |
IDBI Suvidha Tax Saving FD | 6.50% | - | 7% |
IDFC First Bank Tax Saver FD | 7% | - | - |
Indus Tax Saver Scheme | 7.25% | - | |
KBL Tax Planner | 6.50% | - | 6.90% |
KVP Tax Shield Deposits | 7% | 6.25% | - |
RBL Tax Savings Fixed Deposits | 7.10% | - | 7.60% |
South Indian Bank Tax Gain | 6% | - | 6.50% |
The interest rates on tax saver fixed deposit rates are accurate as of Aug. 9, 2024.
How is Fixed Deposit Interest Rates Calculated
An investment in FD requires depositors to invest a lump sum amount for a specific tenure ranging from as low as seven days to 10 years. You earn interest upon the principal amount, which varies according to the tenure of the deposit. Banks have specified interest rates (like those mentioned above) on their official website, which change occasionally. For this reason, interest rate calculation becomes essential to give you an idea of your earnings.
Firstly, two methods are used to calculate interest on a fixed deposit, using simple and compound interest formulas.
For example, invest INR 10,000 to earn 8% interest annually for five years deposit. The simple interest and compound interest calculation will be:
Simple Interest
The formula for simple interest is P x R x T/100.
P = Principal amount = INR 10,000
R = Rate of interest per annum = 8%
T = Tenure = 5 years
P x R x T/100
= 10,000 x 8 x 5 ÷ 100
= INR 4,000
Compound Interest
So, using the simple interest calculation, you will earn INR 4,000 on your deposit in five years.
The formula for compounding interest is P {[(1 + i/100)^n] – 1}
P = Principal amount = INR 10,000
n = compound interest frequency = five years
i = Rate of interest per annum = 8%
P {[(1 + i/100)^n] – 1}
= 10,000 {(1+8/100)5 – 1}
= INR 4,693
So, using the compound interest calculation, you will earn INR 4,693 on your deposit in five years.
Eligibility Criteria to Open Fixed Deposit Account
Fixed deposit is a popular short- to mid-term investment instrument where payment is made in bulk, and the tenure ranges from as low as seven days up to 10 years. To be eligible for opening a bank account, consider:
Account Type: Fixed deposits can be opened by an individual, including a minor, jointly or with more than one individual. Banks also allow businesses, organizations, and charities to open an investment account.
Age: Banks don’t consider age a factor when opening an FD account. It can be opened in the name of minor and senior or super citizens, provided they provide relevant documents.
Nomination: FDs allow nomination, and those who act as a beneficiary receive the benefits of FD in case of the applicant’s death.
Documents Required to Open Fixed Deposit Account
Any one of the following documents is required for opening a fixed deposit by an individual, along with two passport-size photographs:
Proof of identity: Passport, Aadhar card, driving license, voter ID card, PAN card, etc.
Proof of address: Electricity bill, Aadhar card, telephone bill, ration card, etc.
Banks may also ask for other documents, including a salary slip, a six-month bank account statement, an income tax or wealth tax assessment order, a birth certificate for a minor, and a pension payment order (PPO) for a pensioner.
For a tax saver fixed deposit, the taxpayer should submit additional documents, including Forms 15H and 15G, as per bank rules.
Reasons to Invest in Fixed Deposits
Individuals can earn interest on FDs to attain mid to long-term financial goals. Here, a depositor makes a lump-sum investment to get a fixed rate of return at maturity. However, RoI is not the only factor in choosing the best FD scheme.
Investors can choose between regular and tax-saving fixed deposits. Deposits made on regular fixed deposits allow early withdrawal, making it an ideal avenue to park money. However, an exit fee is levied. On the other hand, tax-saving FDs do not permit early withdrawal, or before five years, for depositors to get tax benefits.
Tax saver fixed deposit schemes have a lock-in period of five years and have become a popular investment option for Indians. Such schemes allow investors to claim a tax deduction under Section 80C of the Indian Income Tax, 1961.
Depending on banks, depositors can also avail of secured loans, such as home and car loans, against fixed deposits as collateral. Such loans allow borrowers to get a loan up to 80% to 90% of the FD amount. Remember, tax-saving FDs do not offer loans or premature withdrawal facilities.
Remember, almost all banks offer special fixed deposit rates (like the one mentioned above) on FDs for a fixed tenure (like 400 days, etc.).
Overall, banks provide various benefits on fixed deposit saving instruments, which differ from one bank to another. The maturity tenure of the investment on regular fixed deposits usually ranges from a week up to 10 years. Individuals can benefit from the savings instrument based on their financial goals.
Related: Different Types of Fixed Income Instruments.
How to Choose the Best FD Rate Scheme?
Factors to consider when choosing the best FD scheme to match your financial goals are as follows:
- Cumulative fixed deposit: Also referred to as reinvestment fixed deposit, this type of deposit involves an investor making a lump-sum deposit for a certain lock-in period. The RoI earned quarterly or annually, along with the principal amount, gets compounded and paid at the maturity tenor’s end.
- Non-cumulative fixed deposit: An investor can choose to invest in a non-cumulative fixed deposit for the flexibility to withdraw just the FD interest earned from the principal amount either monthly, quarterly, half-yearly, or annually, as per the bank’s policy.
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NRI Fixed Deposit- Features & Benefits
Financial institutions also allow Indian residents living abroad to invest in fixed deposit schemes and earn interest on their savings. However, there are terms and conditions that follow:
- NRI fixed deposits are subject to a minimum deposit tenor of one year up to 10 years.
- Most banks require a minimum deposit on NRI FDs; however, the investment has no upper ceiling.
- NRIs can earn attractive rates on their FDs. Moreover, some banks also allow NRIs to earn interest payout benefits on FDs, which they can choose from monthly, quarterly, or on maturity.
- Most banks do not charge taxes on the interest earned on NRI fixed deposits.
- NRIs can invest in FDs via wire transfers from their overseas account to NRI account in India.
- For example, money can be sent swiftly via digital remittance services or an e-wallet.
Frequently Asked Questions (FAQs)
Do banks offer tax-saving benefits on fixed deposits?
Investors can earn up to INR 1.5 lakh per financial year on tax-saving fixed deposits with a five-year maturity tenure. However, tax-saving FDs do not offer loan benefits or premature withdrawal facilities.
Is the fixed deposit rate the same for senior citizens?
Depending on the bank’s policy, senior citizens are given an additional interest rate of 0.50% to 0.75% on fixed deposits.
Can I withdraw the fixed deposit amount before maturity?
Yes, premature withdrawal is allowed on regular FDs up on an exit fee. However, banks do not allow tax benefits on premature withdrawal of tax-saving FDs.
Do I get a guarantee on the amount I invest on fixed deposits?
Yes. The Reserve Bank of India (RBI), through its DICGC scheme, protects investments and interest earned on fixed deposits up to INR 5 lakh.
How much interest will I get in investing in FD in five years?
As of July 9, 2024, banks offered interest rates ranging from 5.75% to 8.25% for fixed deposit tenure up to three years.
Can I get monthly interest on my fixed deposit?
Yes, non-cumulative fixed deposits allow investors to withdraw just the FD interest earned from the principal amount either monthly, quarterly, half-yearly, or annually, per the bank’s policy.
Is interest on fixed deposits taxable?
Yes, interest earned on regular fixed deposits is taxable if the total income in a financial year exceeds INR 2.5 lakh.
What is the minimum and maximum tenure for fixed deposit?
Depending on the bank, investors can start investing in FDs with a minimum maturity period of six months up to 10 years. Some banks also allow investment in FDs with less than six months of maturity.
How do banks calculate interest on your fixed deposits?
Calculating interest on fixed deposits uses simple and compound interest methods. Most banks provide an online FD calculator to determine the aggregate interest amount you would earn on a certain maturity tenor.
Why do senior citizens need a tax-saving fixed deposit?
The interest earned on FDs is taxable. A senior citizen can submit Form 15H to the bank to claim a deduction of up to INR 50,000 on the interest earned on tax-saving FDs.
What is the current rate of interest on fixed deposits provided by banks in India?
As of Aug. 9, 2024, lending institutions are offering a maximum of 7.55% on fixed deposits up to INR 3 crore for a tenure of up to three years, 7.40% for five years, and up to 7% for ten years.