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Bank Fixed Deposits - Fixed Deposit Interest Rates

Updated on: 07 Jun, 2024 12:39 PM

Do you want to invest the money and get good returns on your investment?

Well, an FD or a Fixed Deposit is the answer. An fixed deposit is a type of investment in which an individual invests a lump sum amount with a bank at a particular rate of interest. FD holders can choose to receive interest either monthly, quarterly, annually.

FDs are one of the safest investment options that can lead to no capital loss in any case. They also offer a better rate of interest as compared to savings account. Therefore, FDs offer a safe and attractive investment option for investors. In this artice, we will discuss about the fixed deposit interest rates, fixed deposits features, eligibility.

What is Fixed Deposit?

Fixed Deposit is a popular investment option provided by banks, in which you can deposit fixed amount of money for a specific period of time and gain from high interest rates. It is one of the safe and secure investments which offers safety and stability to your invested amount. It pays a fixed rate of interest till the maturity period which is higher than regular savings account.

In other words, we can say that a Fixed Deposit is a bank deposit or deposit of the money in the bank for a specific period of time chosen by the investor or depositor at a fixed rate of interest. In FD you can deposit money for as short as a week to 10 years of time. The opening of a fixed deposit with the bank is that you are lending money to the bank, and it pays you interest that you agreed during the investment. As the time period and interest rates are fixed so it is called Fixed Deposit (FD). Later in this article, we will discuss about the fixed deposit interest rates offered by different banks.

Fixed Deposit Interest Rates - Features

  • The fixed deposit schemes offered by most banks can be availed for tenures ranging from seven days to 10 years. Few banks also offer a fixed deposit ranging upto 20 years.
  • The interest on FDs is compounded on a quarterly basis for most of the banks.
  • Periodic payouts, monthly payouts and quarterly are available.
  • For senior citizens, banks offer 0.25% to 0.50% extra on the investment or Fixed deposits.
  • Banks offer Loan against the fixed deposit or up to 90% of amount available. The interest is only 0.5% to 1% higher than the interest rate offered for FD.
  • Tax deduction at source (TDS) at the rate of 10% is deducted if the interest income is more than Rs.10,000 in financial year.
  • There might be a penalty on premature withdrawal of Fixed Deposits.

The Fixed Deposit Rates Of Different Banks

The list of different banks and their interest rate offerings in 2024 are mentioned below. These rates are from the lowest 7 days to a maximum range of 10 years.

Bank FD Rate of interest Senior Citizen FD rates
SBI Fixed deposit interest rate 7.1% 7.6%
HDFC fixed deposit interest rate 7.25% 7.75%
ICICI Bank Fixed Deposit Interest Rate 7.2% 7.75%
Axis Bank fixed deposit interest rate 7.2% 7.75%
Kotak Bank fixed deposit interest rate 7.40% 7.90%
IDFC Bank fixed deposit interest rate 8.00% 8.5%
Bank Of Baroda fixed deposit interest rate 7.25% 7.75%
Citibank fixed deposit interest rate 7.2% 7.85%
IDBI Bank fixed deposit interest rate 7.00% 7.5%
Indian Bank fixed deposit interest rate 7.25% 7.75%
Indian Overseas Bank fixed deposit interest rate 7.3% 7.8%
OBC fixed deposit interest rate 5.75% – 6.75%
PNB fixed deposit interest rate 7.25% 7.75%
PNB HOUSING FINANCE fixed deposit interest rate 7.4% 7.6%
Allahabad Bank fixed deposit interest rate 5.00% – 6.75%
Bajaj Finance fixed deposit interest rate 8.25% 8.5%

Note: The Bank FD rates are subject to change. Therefore, you must check the FD rates for different periods before investing.

Types Of Fixed Deposits In India

To suit the different needs of different customers, banks offer various types of Fixed deposits. They are:-

  • Regular FD Depositing the money for a fixed tenor, ranging from 1 week to 10 years. The rate of interest is fixed during the time of deposit but it is more than the savings account.
  • Tax-savings FD The principal amount of the FD is tax-exempt upto Rs.1.5 Lakh in a year. The investment made is locked for 5 years and can’t be withdrawn before the maturity date.
  • Senior Citizen FD This FD scheme is for the people aged above 60 years, the rate of interest in a little more than regular FD. It is 0.5% to 1% more than the regular FDs.

Why Do I Invest In Fixed Deposits?

To understand more, the comparison of two different investments are shown. The growth rate and returns are determined.

Given below are the stock prices of Facebook showing a loss of billions, within hours on a day and investors losing millions of dollars.

Fixed Deposits

Now compare the above graph with the chart below. Given below is the chart of growth of an FD investment and the stability and growth it provides.

Fixed Deposits

Who Can Invest In Fixed Deposits?

Given below are the persons who are eligible to invest in fixed deposits -

  • Indian Resident
  • NRIs
  • Individuals or Joint Investors
  • Minors
  • Senior Citizens
  • Sole Proprietorship
  • Companies
  • Partnership Firms
  • Societies or Clubs

Bank Fixed Deposit Interest Rate Calculation

Fixed deposits are also known as Term deposits, which give higher interest rates than other saving investments. An investor can calculate the interest on FDs using the fixed deposit interest rate calculator in which the principal amount (FD Amount), tenure(FD period), rate of interest on FD, and compounding frequency.

The Compounding frequency depends on the type of fixed deposit you choose -

  • Cumulative fixed deposit
    In cumulative FDs, the interest is calculated quarterly or yearly and added to the principal amount, and returned along with the Initial Fixed deposit amount at maturity.
  • Non-Cumulative fixed deposit
    In Non-cumulative FDs the interest is calculated as per the customers choice (monthly/Quarterly/Half yearly/Yearly) and paid to the customers in regular intervals. At the end of the maturity date customer gets the Principal Amount but the interest earned is paid in a regular intervals.

Here is an example to understand better about the Cumulative and Non-Cumulative FDs.

If you are a customer of XYZ Bank and it offers 8% interest rates at 12 months of FD tenure, you choose a fixed deposit amount of Rs.25,000. The interest earned will be as mentioned below.

Deposit Option Interest payment frequency Tenure Deposit Amount Rate of Interest Maturity Amount Interest Earned
Cumulative Annual 12 months Rs.25,000 8.00% Rs.27000 Rs.2000
Non-cumulative Annual 12 months Rs.25,000 8.00% Rs.27000 Rs.2000
Non-cumulative Half-yearly 12 months Rs.25,000 8.00% Rs.27,040 Rs.2040
Non-cumulative Quarterly 12 months Rs.25,000 8.00% Rs.27,061 Rs.2061
Non-cumulative Monthly 12 months Rs.25,000 8.00% Rs.27,075 Rs.2075

Things to Remember Before Investing

Limit of Deposit (min/max):

The minimum deposit limit amount and maximum deposit limit of FDs in the bank. In some banks you can make minimum deposit of Rs.1000, as per some others banks policies the minimum amount will be Rs.10,000 or above.

The higher amount of deposits of FDs are also known as Bulk deposits gives higher interest rates than regular fixed deposits.

Interest Payment Frequency and Compounding Intervals:

The interest payment frequency for an FD is cumulative if the interest is calculated annually and paid at the time of maturity date.

If Non-Cumulative then the interest is paid on regular bases, where the compounding interval of interests will be monthly, quarterly, half-yearly or annually.

Interest rates for Senior citizens:

Senior citizens who are aged above 60 years will get an advantage in the banking services. In case of FDs senior citizens can an extra interest rate of 0.5 to 1% than regular FD interest rates.

Tenure and Maturity :

The tenure for the banks starts from 7 days minimum to maximum of 10 years for FDs. But some banks even a tenure of 20 years. After maturity customers can add the interest and reinvest the entire amount for again for their preferred deposit tenure. Or they can also take out all the amount or reinvest.

Partial Withdrawals and Penalty on Premature withdrawals:

The partial withdrawals are offered by only few banks, it gives a facility to withdraw some amount of fixed deposit and the rest is kept as FD as per the agreed norms and policies of the bank.

The premature withdrawal or breaking FDs before tenure will levy penalty on you by most of the banks. The penalty will be 0.5% to 1% of the interest rates.

Loan against FDs:

Loans against FDs are provided by the banks if they need urgent liquid cash. Banks can give loans from 70% to 90% of the FDs principal amount and charge 2% to 3% more than FDs interest rates.

TDS and TAX on FDs:

Tax deduction at source (TDS) is applicable when the interest earnings are more than Rs.40,000 annually, earlier it was Rs.10,000. It is levied upto 10% and 20% if PAN number is not provided.

Income earned through FDs interest is treated as Income earned from other sources. And tax is levied on the customers as per the customer’s income bracket.

Tax Saving FDs:

You can consider the 5 year period FDs which are used to save tax under section 80C. You can save the tax on 1.5 lakh investing it in tax saving FDs. It is applicable to the resident individuals and HUFs.

Want to learn more about saving taxes? Connect with our tax experts and get end-to-end tax planning and ITR filing services.

Note: The interest earned is taxable.

Can NRI Invest In Fixed Deposit In India?

There are nearly 31.2 million Indian diaspora resides outside of India. NRI have many investment options in India. NRIs hold NRE, NRO accounts which are the popular options among the NRIs to invest in NRE FDs and NRO FDs. It’s an ideal and attractive platform for them to invest and earn good returns.

What Is NRE Account and NRO Account ?

Non-Resident External Fixed deposit is a kind of term deposit account that can be opened by a NRI to make deposits from overseas in the foreign currency will be converted into indian rupees as per the exchange rates.

NRO Fixed deposit account is for the NRIs to manage the money earned by them in India through rent, pension, dividends or salary.

Non-Resident Ordinary Fixed Deposits

One of the popular investment option for the NRIs, it is mostly preferred by the customers because of its safety and reliability even when the market is fluctuating and under high economic crisis.

Interest Rates on NRO FDs offered by different banks for the deposit less than Rs. 1 crore.

Name of the Bank Interest rates Senior citizen Interest rates
Deutsche Bank 6.00% to 8.50% 6.50% to 8.75%
Dhanalakshmi Bank 5.00% to 7.10% 5.50% to 7.60%
Allahabad Bank 4.50% to 7.25% 4.50% to 7.25%
Axis Bank 3.50% to 7.25% 3.50% to 7.25%
Bank of Baroda 4.50% to 7.30% 4.50% to 7.30%
Bharatiya Mahila Bank 5.00% to 7.25% 5.50% to 7.75%
Kotak Mahindra Bank 4.00% to 7.25% 4.50% to 7.75%
Lakshmi Vilas Bank 5.00% to 7.80% 5.00% to 7.80%
Union Bank of India 5.25% to 7.25% 5.25% to 7.25%
Yes Bank 5.50% to 7.50% N.A

Taxation: There is no taxation on the principal amount, but interest earned is taxable.

Repatriation: Banks don’t offer repatriation on principal amount, but interest earned from the NRO FDs can be transferable to foreign accounts.

How to Open the FD with Banks?

Indian banks offer many Fixed deposit options to the customers with high interest rates, flexible tenure ranges and different ranges of interest payment options. Many banks offer regular FDs and Tax saver FDs with high interest rates and extra benefits for the senior citizens.

How To Apply For FD Online?

  1. Visit the banks official website, login with the your User Id and Password of the respective net banking account.
  2. Select the deposit option and select the Fixed deposit schemes.
  3. Fill the required details in the respective fields such as branch of the bank, tenure of the FD, deposit amount.
  4. Choose the bank account which you want to debit the amount and click proceed.
  5. Verify the details and click ‘Confirm’.
  6. Take a printout of the confirmation and check the confirmation SMS sent the registered mobile number.

How To Apply For FD Offline?

  1. Visit the nearest branch of the bank in which you want to open FD account.
  2. Contact the bank executive and ask for the FD application form.
  3. Fill the required details or you can ask the help of banks executive in filling the form.
  4. Along with the form provide the required documents needed and deposit the amount you want to invest in FD.
  5. The bank will provide FD receipt on the successful deposit of the money.

Documents Required To Open Bank FD’s

All the individuals, senior citizens and HUFs can apply for FD’s. Two types of proofs are need to open bank FD’s. Any of the following identity proof and address proof will be suffice.

Identity Proof:

  • Aadhaar Card
  • Passport
  • PAN Card
  • Voter ID card
  • Ration Card
  • Senior Citizen ID Card, etc.

Address Proof:

  • Aadhaar Card
  • Passport
  • Voter ID
  • Electricity Bill
  • Telephone Bill, etc.
Fixed deposit

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Frequently Asked Questions

Q- What is the meaning of cumulative FD?

Cumulative FD is the FD having interest is compounded every quarter or year and paid at the time of maturity.

Q- Is FD transferable?

No it can't be transferred normally.The only way you can do that is by closing your FD account yourself and then transfer.

Q- Which is better cumulative FD and traditional FD?

Cumulative FD are better than traditional FD as interest rate is higher.

Q- What happens to FD after death?

There are two options available with the nominee. One is to continue till maturity and second is to withdraw amount immediately.

Q- What happens to FD after maturity?

There are two options, one of which is need to be selected while opening FD. One is FD is renewed automatically and second is amount gets transferred into savings account as stated in the form

Q- Can I open multiple FD accounts?

Yes a person can open multiple accounts at different bank because there is no restriction from the RBI's end

Q- How do I claim fixed deposit after death?

The documents required by the bank for proof include:

  • Claim Form
  • Death certificate
  • The address and a legal identification document of the nominee.

Q- Can we do a fixed deposit for 2 months?

Yes, a person can have a FD for 2 months. The tenure for a fixed deposit ranges between 7 days – 20 years and it varies from bank to bank.

Q- Can I withdraw interest money from my fixed deposit monthly?

Yes interest money can be withdrawn on a monthly basis.

Q- Is fixed deposit trading legal in India and how does it work

Fixed deposit is an investment scheme free from market fluctuations. They are a low-risk, low-maintenance scheme which lets you deposit a lump sum at one go and earn appreciable income on the same. However, you cannot trade fixed deposits.

Q- What should I write in a cheque leaf for opening a fixed deposit?

If you are accounting for a business account, write the “name of the bank” and note “fixed deposit - maturing on.

If you are accounting for a personal account, write the “name of the bank” and note “fixed deposit - maturing on

Q- Are fixed deposits in small finance banks safe and free from risks?

Investing in the FDs of small finance banks can fetch you higher returns, investment in these avenues may be a bit risky compared to bank FDs.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.