Fixed deposits are a popular investment option provided by banks and financial institutions. It is a secure option wherein the investor deposits a lump-sum amount for a specific period and earns a fixed interest rate. Fixed deposits provide guaranteed returns and are low risk choices for individuals with a low-risk appetite and those looking to grow their savings while maintaining capital safety. A premature withdrawal option is also available in case of financial exigencies but with a penalty.
What is a Fixed Deposit?
Depositing a specific amount of money for a predetermined duration determined by the investor is a fixed deposit account definition. This timeframe can range from 7 to 10 years. In exchange for this commitment, fixed deposits offer a fixed interest rate. Upon maturity, the depositor receives the initial principal along with the accrued interest. This investment option is highly favoured in India, especially among risk-averse middle-class investors. Now, let us delve into how to open a fixed deposit account, the best interest rates, and the advantages of a fixed deposit.
Best FD Rates in 2024
The best FD Rates offered by top banks in India are given below
Name of the Bank | General Public p.a. | Senior Citizens p.a. |
ICICI Bank | 7% | 7.50% |
HDFC Bank | 7.20% | 7.70% |
SBI | 7.10% | 7.60% |
Punjab National Bank | 7.25% | 7.75% |
Canara BankFixed | 7.25% | 7.75% |
IndusInd Bank | 7.50% | 8.25% |
IDFC First Bank | 7.50% | 8% |
HSBC Bank | 7.25% | 7.75% |
Kotak Mahindra Bank | 7.25% | 7.75% |
Axis Bank | 7.10 | 7.60 |
Bank of Baroda | 7.45% | 7.45% |
Indian Overseas Bank | 7.25% | 7.75% |
Bank of Maharashtra | 7% | 7.50% |
Union Bank of India | 7% | 7.25% |
Yes Bank | 7.75% | 8.25% |
IDBI Bank | 6.80% | 7.30% |
Best FD Rates of Small Finance Banks
The best FD rates of Small Finance Banks are given below:
Name of the Bank | Highest FD Rate | Rate for 1 year | Rate for 3 years | Rate for 5 years | Senior Citizens-additional interest |
Jana Small Finance Bank | 8.50% | 8% | 8.50% | 7.25% | 0.50% |
Equitas Small Finance Bank | 8.50% | 8.20% | 8% | 7.25% | 0.50% |
Unity Small Finance Bank | 9% | 7.35% | 7.65% | 7.65% | 0.50% |
Fincare Small Finance Bank | 8.51% | 7.50% | 8% | 8% | 0.60% |
ESAF Small Finance Bank | 8.50% | 6% | 6.75% | 6.25% | 0.50% |
Suryoday Small Finance Bank | 8.60% | 6.85% | 8.60% | 8.25% | 0.50% |
Utkarsh Small Finance Bank | 8.50% | 8% | 8.50% | 7.50% | 0.60% |
Shivalik Small Finance Bank | 8.10% | 8.10% | 8% | 7% | 0.50% |
AU Small Finance Bank | 8% | 6.75% | 8% | 7.25% | 0.50% |
Ujjivan Small Finance Bank | 8.25% | 8.25% | 7.20% | 7.20% | 0.50% |
Best FD Rates of Public Sector Banks
The best FD rates of Public Sector Banks are given below
Name of the Bank | General Public Rate p.a. | Senior Citizen Rate p.a. |
Bank of Baroda | 3% to 7.25% | 3.50% to 7.75% |
Bank of India | 3% to 7.25% | 3.75% to 7.75% |
Bank of Maharashtra | 2.75% to 7% | 3.25% to 7.50% |
Canara Bank | 4% to 7.25% | 4.50% to 7.75% |
Central Bank of India | 4.75% to 7.15% | 5.25% to 7.65% |
Indian Bank | 2.80% to 7.25% | 3.30% to 7.75% |
Indian Overseas Bank | 4% to 7.25% | 4.50% to 7.75% |
Punjab National Bank | 3.50% to 7.25% | 4% to 7.75% |
Punjab & Sind Bank | 2.80% to 7.35% | 3.30% to 7.85% |
Union Bank of India | 3% to 7% | 3.50% to 7.50% |
UCO Bank | 4.40% to 6.50% | 4.90% to 7% |
State Bank of India | 5.25% to 7% | 5.75% to 7.50% |
Best FD Rates of Private Sector Banks
The best FD Rates of Private Sector Banks are given below:
Name of the Bank | General Public Rate p.a. | Senior Citizen Rate p.a. |
Axis Bank | 3% to 7.10% | 3.50% to 7.60% |
Bandhan Bank | 3% to 7.85% | 3.50% to 8.35% |
CSB Bank | 3% to 7.35% | 3.50% to 7.85% |
City Union Bank | 5% to 7% | 5% to 7.50% |
DCB Bank | 3.75% to 7.90% | 4.25% to 8.40% |
Dhanlaxmi Bank Ltd | 5.75% to 7.25% | 6.25% to 7.75% |
Federal Bank | 3% to 7.30% | 3.50% to 7.80% |
HDFC Bank | 3% to 7.25% | 3.50% to 7.75% |
ICICI Bank | 3% to 7.10% | 3.50% to 7.60% |
InduSind Bank | 3.50% to 7.50% | 4.25% to 8.25% |
IDFC First Bank | 3.50% to 7.50% | 4% to 8% |
Jammu & Kashmir Bank Ltd | 3.50% to 7.10% | 4% to 7.60% |
Karnataka Bank Ltd | 4.50% to 7.30% | 4.90% to 7.80% |
Karur Vysya Bank Ltd | 4% to 7.40% | 6.65% to 7.80% for tenure ranging from 1 year to 10 years |
Kotak Mahindra Bank Ltd | 2.75% to 7.25% | 3.25% to 7.75% |
Nainital Bank Ltd | 3.25% to 7.10% | 3.75% to 7.60% |
RBL Bank Ltd | 5.50% to 7.80% | 6% to 8.30% |
South Indian Bank Ltd | 4.50% to 7% | 5% to 7.50% |
Tamilnad Mercantile Bank Ltd | 5.25% to 7% | 7% to 7.50% for tenure ranging from 1 year to 10 years |
Yes Bank Ltd | 3.25% to 7.75% | 3.75% to 8.25% |
IDBI Bank Ltd | 3% to 6.80% | 3.50% to 7.30% |
Tax Saving FD Rates in 2023
The best Tax Saving FD Rates are given below:
Name of the Bank | General Public Rate p.a. | Senior Citizens Rate p.a. |
IndusInd Bank | 7% | 7.75% |
HDFC Bank | 7% | 7.10% |
IDBI Bank | 6.10% | 6.85% |
IDFC First Bank | 7% | 7.50% |
Federal Bank | 6% | 6.50% |
DCB Bank | 7.25% | 7.75% |
Yes Bank | 6.75% | 7.05% |
Axis Bank | 6.10% | 6.85% |
SBI | 6.50% | 7% |
RBL Bank | 6.55% | 7.05% |
Canara Bank | 6.80% | 7.30% |
PNB | 6.50% | 7% |
Corporate Fixed Deposit Rates in 2023
Given below are the Fixed Deposit Rates of top Corporate Deposits
Name of the Company | Crisil Rating | Interest Rate | Tenure | Additional interest for Senior Citizens |
Mahindra Finance | FAAA | 7.60% to 8.05% | 1 to 5 years | 0.25% |
Bajaj Finance | AAA | 7.40% to 8.35% | 1 to 5 years | 0.25% |
ICICI Housing Finance | FAAA | 7% to 7.60% | 1 to 10 years | 0.25% |
Shriram Finance | AA+ | 7.60% to 8.50% | 1 to 5 years | 0.50% |
LIC Housing Limited | FAAA | 7.25% to 7.75% | 1 to 5 years | 0.25% |
PNB Housing Finance | FAA | 7% to 7.85% | 1 to 10 years | 0.30% |
Why Invest In An FD Account?
Several advantages of fixed deposits as mentioned below are the reasons for investing in an FD Account.
Guaranteed Returns
Unlike stocks, fixed deposits are unaffected by market changes. FD interest rates remain steady, ensuring predictable returns for financial planning.
Capital Protection
The FDs are covered by DICGC up to Rs. 5.00 lakhs ensuring your capital is safe in case of any eventuality.
Loans against FD
For financial emergencies, you can avail loan against fixed deposits up to 95% of the deposit. The deposit continues to earn interest during the loan term. If an overdraft facility is opted, interest will be charged only to the extent of funds utilised.
Credit Cards against FD
Those with low credit scores can use FD to secure credit cards. Can build their credit score through disciplined card usage.
Effortless Investment
FDs offer swift, hassle-free investment, especially in the same bank where minimal documentation is needed, and funds can be seamlessly transferred from your savings account.
Withdrawal Flexibility
Unlike certain instruments with lock-in periods, FDs allow early withdrawals, offering access to funds in emergencies with nominal charges.
How to Choose the Right Fixed Deposit?
Keep in mind the following factors while choosing a Fixed Deposit.
- Rate of Interest: Higher interest rates yield better returns. Compare interest rates among different institutions to maximise returns.
- Application Process: Seek an easy and paperless application process. Look for banks and NBFCs offering hassle-free FD account opening.
- Type of FD: Choose between cumulative and non-cumulative FDs.Cumulative FDs accumulate interest until maturity; non-cumulative FDs pay interest periodically.
- Ability to Avail a Loan: Check if the institution allows loans against your FD. Access quick loans during financial emergencies, usually up to 90% of your deposit.
- Premature Withdrawal: Ensure the FD plan permits early withdrawals. Be aware of penalties for premature withdrawals, which vary by institution.
- Credibility of the Institution: Assess the institution’s credibility. For NBFCs, consider credit ratings by agencies like CRISIL and ICRA. For banks, rely on the DICGC insurance coverage, up to ₹5 lakhs, for added security.
Benefits and Features of Fixed Deposit
The features of fixed deposits as well as benefits are as mentioned below.
- FD investment durations range from 7 days to 10 years, varying by bank.
- Returns are compounded periodically, e.g., quarterly, annually, or monthly.
- Senior citizens enjoy 0.5% higher interest rates than regular investors.
- Premature withdrawal is possible with penalties for early withdrawal.
- After maturity, funds can be reinvested.
- Guaranteed interest rates provide financial predictability.
- Tax deductions only occur after exceeding income tax guidelines.
- Deposit holders determine the tenure, with the option to renew.
- FDs are easily liquidated, including online via net banking.
- FDs offer emergency financial backup, with loans up to 95% of the deposit amount.
- FDs are a secure and reliable investment choice.
How to Apply for Fixed Deposit Online?
This is how you apply for a fixed deposit online:
- Visit the bank’s official website.
- Locate the “Fixed Deposit” option on the bank’s online portal.
- Complete all mandatory fields: tenure, nominee, amount, and digital signatures. Submit the required documents.
- Review and confirm all entered details before submitting.
- Utilise net banking to make the deposit payment securely.
- Save the payment receipt for future reference.
How to Apply for Fixed Deposit Offline?
- Visit the bank branch
- Procure the application form for fixed deposit
- Submit the duly filled and signed application along with the documents required.
- On approval of the application, the amount will be transferred from your account with the bank and the fixed deposit opened.
- You will receive a deposit receipt which has to be kept safely for future reference.
Fixed Deposit FAQ’s:-
The maximum tenure for fixed deposits is 10 years.
The investor decides the tenure for fixed deposits.
Banks provide the auto-renewal option wherein the deposits are automatically renewed for the original tenure on the maturity of the deposits.
The minimum investment is Rs. 100/- and there is no maximum limit.
The maximum investment permitted under Tax Saver FDs is Rs. 1.50 lacs.