A survey of 1,500 people living in cities in India found that 26% of respondents invested in FDs or RDs for the first time in 2021. The fixed deposit is your best friend because FD interest rates don’t change based on market fluctuations. This article will tell you everything you need to know about fixed deposits and FD interest rates across different options. You’ll be an expert by the end!
Fixed Deposit Interest Rates of Top 10 Banks in India
Given FD interest rates are an essential part of the investment plan, it’s necessary to know the current FD rates to make an informed decision about creating your FD. FD rates in India vary from bank to bank based on investment tenure. A fixed deposit is one of the safest investment options for people. FD interest rates are fixed, and they offer guaranteed returns. We must compare the FD rates of various banks in India to find the highest FD interest rate. Here are the fixed deposit interest rates of the top 10 banks in India.
| Bank | For General Citizens | For Senior Citizens |
|---|---|---|
| HDFC Bank FD | 2.75% to 6.10% | 3.25% to 6.60% |
| RBL Bank FD | 3.25% to 7% | 3.75% to 7.50% |
| Bank of Baroda FD | 3% to 5.50% | 3.50% to 6.50% |
| IDBI Bank FD | 2.70% to 5.75% | 3.20% to 6.50% |
| Axis Bank FD | 2.50% to 6.05% | 2.50% to 6.80% |
| Punjab National Bank FD | 3% to 6.10% | 3.50% to 6.60% |
| State Bank of India FD | 2.90% to 5.65% | 3.40% to 6.45% |
| IDFC First Bank FD | 3.50% to 5.50% | 4.00% to 7.40% |
| Kotak Mahindra Bank FD | 2.50% to 5.90% | 3.00% to 6.40% |
| Canara Bank FD | 2.90% to 6% | 2.90% to 6.50% |
Top 10 Tax Saver FD Interest Rates
Only Hindu Undivided Families and individuals can invest in a tax-saving fixed deposit arrangement under the present income tax laws. With a bank where you currently have a savings account or with another bank, you can open a tax-saving FD account. The bank must, however, permit you to open an FD account without a savings account in the latter scenario.
The interest rates offered for tax-saving fixed deposit plans vary between banks. For instance, the SBI FD rates for normal residents are 5.30%, whereas the ICICI Bank offers regular customers an FD interest rate of 5.35% for the same tax-saving FDs. Both the non-cumulative interest option and the cumulative interest payment option are available to you, and they are typically provided by most institutions.
| Bank Name | Interest Rates |
|---|---|
| State Bank of India | 5.40% |
| Kotak Mahindra Bank | 5.30% |
| HDFC Bank | 5.30% |
| Punjab National Bank | 5.25% |
| IDFC Bank | 5.25% |
| Deutsche Bank | 6.25% |
| Axis Bank | 5.75% |
| DCB Bank | 5.95% |
| Bank of Baroda | 5.25% |
| Lakshmi Villas Bank | 5.75% |
Special FD Interest Rates for Cumulative Deposits
Fixed deposits come in two varieties: cumulative and non-cumulative. In a cumulative fixed deposit arrangement, the interest rate is compounded annually and paid out at the end of the tenure rather than being fixed at half-yearly or annually. For instance, if you deposit money into a financial institution with a 10% interest rate under a cumulative scheme, you will only receive interest after the program’s term rather than every month or year. The company will pay the principal sum and accrued interest after the term. In other words, if you have a fixed deposit of Rs. 1 lakh, you can receive Rs. 10,000 in interest each year.
Non-Cumulative Special FD Interest Rates
Under a non-cumulative fixed deposit, the interest is paid annually or monthly as decided by the bank. If we take the example mentioned earlier, the interest will be paid every quarter of Rs. 2500. Investors who wish to receive regular income can opt for non-cumulative FD instead of cumulative FD. Non-cumulative Fixed deposits are perfect for pensioners who wish to receive a monthly payment of interest.
Non-Cumulative FD Rates for Customers Below 60 Years
| Tenor (months) | 15 | 18 | 22 | 30 | 33 | 44 |
| Monthly | 6.36% | 6.46% | 6.60% | 6.83% | 6.93% | 7.25% |
| Quarterly Basis | 6.40% | 6.49% | 6.63% | 6.87% | 6.97% | 7.30% |
| Half Yearly | 6.45% | 6.54% | 6.69% | 6.93% | 7.03% | 7.36% |
| Annual | 6.55% | 6.65% | 6.80% | 7.05% | 7.15% | 7.50% |
Non-Cumulative FD Rates for Senior Citizens
| Tenor | 15 | 18 | 22 | 30 | 33 | 44 |
| Monthly | 6.60% | 6.69% | 6.83% | 7.07% | 7.16% | 7.49% |
| Quarterly | 6.63% | 6.73% | 6.87% | 7.11% | 7.20% | 7.53% |
| Half Yearly | 6.69% | 6.79% | 6.93% | 7.17% | 7.27% | 7.61% |
| Annual | 6.80% | 6.90% | 7.05% | 7.30% | 7.40% | 7.75% |
How Does a Fixed Deposit Account Work?
Before jumping into the lucrative ocean of the best FD interest rates in India, you should know what the water is going to feel like: how does an FD work?
Fixed deposits are created in banks by depositing a specific sum of money for a particular period. During this time, your money earns interest based on pre-decided rates until maturity, i.e. the period you decided on, at which point you get the total amount you invested back plus interest! However, until this time is up, you cannot access the money. Think of it like a piggy bank: once the money is in, it doesn’t come out until you break the piggy bank; the bank, however, will add returns from your FD rates as long as the piggy bank is intact.
How is FD Interest Rate Calculated in India?
FD rates in India are calculated based on the mathematical principles of simple interest and compound interest. It’s easier than it sounds, even if you hated maths as a kid! There are two kinds of FD interest rates: simple interest and compound interest. The choice between the two depends on the type of FD and its terms.
| Tenure of Investment | Post Office FD Rates in 2022 |
| 1 year | 5.50% |
| 2 years | 5.50% |
| 3 years | 5.50% |
| 5 years | 6.70% |
With simple interest, FD rates are calculated based on the principal amount invested only. With compound interest, FD rates are calculated based on the sum of the principal investment and the interest the deposit has already earned. In the long term, this can lead to very lucrative returns!
The formula for simple interest is as follows:
SI Simple Interest=principal investment×rate of interest ×tenure of investment 100
Let’s say you decided to invest Rs. 25,000 for 10 years at an interest rate of 7% per annum. If you are earning simple interest on this deposit, your returns will be calculated as follows:
SI Simple Interest=25,000×7×10100=17,500
In 10 years, your FD will have earned Rs. 17,500 on your principal investment.
The formula for compound interest is a little more complex because earnings from your interest are added to your principal amount at the end of each year – or other specified period. The maths is worth it, though, because the returns are greater!
Let’s take the same example as before and calculate its compound interest.
In the first year, this FD will earn Rs. 1,750:
Interest=25,000×7×1100=1,750
In the second year, the first year’s interest will be added to the principal, and interest will be calculated on the sum of the two, as follows:
Interest=(25,000+1750)×7×1100=1,872.5
Like magic, the interest you have earned has gone up. This addition takes place at specified intervals – sometimes quarterly, sometimes yearly – and makes your returns go up. Instead of calculating for each year, this formula can be used:
CI Compound Interest=principal amount ×(1+interest 100) tenure of investment-1
Using this formula, the final returns on this investment will be Rs. 25,040.
CI Compound Interest=25,000 ×(1+7100) 10-1=25,040
If you’re thinking about running away, don’t! Banks offer easy-to-use calculators that will do this maths for you – all you need to do is punch the numbers in!
If you’re looking for the highest FD interest rates, you’ll need to compare interest rates across tenures. The table below lists ranges of the current FD rates in India by bank.
| Bank Offering FD | Yearly Interest Range for General Citizens | Yearly Interest Range for Senior Citizens |
| Axis Bank | From 2.50% to 5.75% | From 2.50% to 6.50% |
| Bank of Baroda | From 2.80% to 5.25% | From 3.30% to 6.25% |
| Canara Bank | From 2.90% to 5.50% | From 2.90% to 6.00% |
| State Bank of India | From 2.90% to 5.50% | From 3.40% to 6.30% |
| HDFC Bank | From 2.50% to 5.60% | From 3.00% to 6.35% |
| Punjab and Sind Bank | From 3.00% to 5.30% | From 3.50% to 5.80% |
| Punjab National Bank | From 2.90% to 5.25% | From 3.50% to 5.75% |
| IDFC | From 2.50% to 6.00% | From 3.00% to 6.50% |
| Bank of India | From 2.85% to 5.05% | From 3.35% to 5.55% |
The highest FD rates are offered by Punjab and Sind Bank and IDFC bank; however, these rates will depend on the tenure of your fixed deposit.
If you are investing in India, you are spoilt for choice between domestic and foreign banks. These are the current FD interest rates offered by foreign banks operating in India.
| Bank Offering FD | Interest Rate |
| Citibank | From 2.75% to 3.50% |
| HSBC Bank | From 3.10% to 4.00% |
| Standard Chartered Bank | From 5.25% to 5.60% |
| DBS Bank | From 5.00% to 5.75% |
| Deutsche Bank | From 3.85% to 6.25% |
| Barclays | From 3.58% to 5.36% |
In foreign banks, you’ll get the best FD rates with Standard Chartered Bank and Deutsche Bank, depending on the tenure of your deposit.
Highest FD Interest Rates
If you’re looking for the highest FD rates in banks, the following tables rank the highest FD rates in India by tenure.
These are the Best FD Rates in Bank for 1 Year Tenure.
| Rank | Bank Offering FD | General Interest Rate | Senior Citizen Interest Rate |
| 1 | IDFC | 4.50% | 5.00% |
| 2 | Punjab and Sind Bank | 4.50% | 5.00% |
| 3 | State Bank of India | 4.40% | 4.90% |
| 4 | Canara Bank | 4.40% | 4.90% |
| 5 | Punjab National Bank | 4.40% | 4.90% |
These are the Best FD Rates for 2 Year Tenure.
| Rank | Bank Offering FD | General Interest Rate | Senior Citizen Interest Rate |
| 1 | Union Bank of India | 5.10% | 5.60% |
| 2 | Canara Bank | 5.10% | 5.60% |
| 3 | IDFC | 4.75% | 5.25% |
These are the Best FD Rates in India for 3 Year Tenure.
| Rank | Bank Offering FD | General Interest Rate | Senior Citizen Interest Rate |
| 1 | Axis Bank | 5.40% | 5.90% |
| 2 | Punjab and Sind Bank | 5.15% | 5.65% |
| 3 | State Bank of India | 5.10% | 5.60% |
| 4 | IDFC | 5.00% | 5.00% |
These are the Highest FD Interest Rates for 5 Year Tenure.
| Rank | Bank Offering FD | General Interest Rate | Senior Citizen Interest Rate |
| 1 | Axis Bank | 5.15% | 6.05% |
| 2 | State Bank of India | 5.40% | 5.90% |
| 3 | Union Bank of India | 5.40% | 5.90% |
| 4 | Canara Bank | 5.25% | 5.75% |
| 5 | IDFC | 5.20% | 5.70% |
These are the Best Tax Saving FD Rates.
| Rank | Bank Offering Tax Saving FD | General Interest Rate | Senior Citizen Interest Rate |
| 1 | IndusInd Bank | 6.00% | 6.50% |
| 2 | IDFC | 5.75% | 5.80% |
| 3 | Axis Bank | 5.40% | 6.05% |
| 4 | HDFC | 5.35% | 5.85% |
| 5 | Punjab and Sind Bank | 5.30% | 5.80% |
Is It Wise to Go for Fixed Deposits?
With all this information, you might be wondering whether you should rush to open that FD right now. FDs are a great investment option if you’re looking for low-risk ways to save money while securing steady but higher returns than a savings account can offer you. FDs are also a great way to put large sums of money to create a regular income based on interest return payouts. The stability and guaranteed returns promised by FDs are an excellent way to set money aside for big goals like education or travel.
However, if you’re looking to generate wealth rather than simply save, FDs might not be the best option. Because they are, by definition, not linked to the market and offer steady interest rates, they will fail to account for inflation. If you can take moderate risks, some market-linked options would be a better choice for wealth creation in the long term. Investment tenure is the most critical factor influencing the interest rates your FD will come with. It’s important to remember that the longest terms do not necessarily give you the highest FD interest rates, so it’s essential to do your research before you find the right choice for you.
Ultimately, the best investment advice for investments is not to put all your eggs in one basket. FDs are a great investment plan, but they shouldn’t be your only investment strategy.
Conclusion
Overall, FDs are a steady, reliable, and long-term investment plan to save money in the long term. Performing an FD rates comparison will allow you to choose the most profitable option tailored to your needs. FD interest rates will enable you to earn returns with no market-related risks, which has become an increasingly important form of stability in light of the economic ups and downs caused by the COVID-19 pandemic and other global events.
FAQs
The minimum tenure period for Fixed deposit is seven days.
FDs offer steady and assured returns with no market-related risk and are a great way to save money at interest rates higher than what your savings bank account can provide you with. FD rates are a great way for people to earn a steady income.
no, premature withdrawal from tax saver term deposit is not allowed. The minimum lock in period is 5 years.
The choice of the fixed deposit account’s duration is entirely up to the account holder. Depending on the bank or NBFC, an FD’s minimum period can be anything between seven days and ten years.
When you remove from your bank FD before it matures, banks impose fees. The penalty is typically charged when you withdraw the FD during the designated tenure, in accordance with the terms and restrictions set by the bank. The normal range of penalty fees is 0.5 to 1% of the interest rate.
Unless it is a special tax-saving FD, which is offered tax benefits under Section 80C of the Income Tax Act of 1961, the interest your FD makes will be taxed according to your tax bracket if it is more than Rs. 40,000.
FD interest rates vary from bank to bank and are based on tenure. To find the best FD interest rates in India for you, you should compare interest rates for the term you have in mind to get an idea of the best option.
Also Read: Fixed Deposit Calculator
