FDs for senior citizens: 12 private banks offer 8% and above interest rates

Fixed deposits (FDs) have long been a trusted choice, particularly among senior citizens in India. Many private banks in India such as RBL Bank, SBM Bank India, and IndusInd Bank, are currently offering FD interest rates of over 8%, making them an appealing option for those seeking secure investments with guaranteed returns. If you're looking to park your money in a private bank, many options offer over 8% interest.

According to PaisaBazaar, some of the best options among private banks available as of October 1, 2024, are:

1. Bandhan Bank  

Highest Slab Interest Rate: 8.55% (for 1 year)  

1-year Tenure Interest Rate: 8.55%  

3-year Tenure Interest Rate: 7.75%  

5-year Tenure Interest Rate: 6.60%  

No additional rate for super senior citizens

2. City Union Bank  

Highest Slab Interest Rate: 8.% (for 333 days)  

1-year Tenure Interest Rate: 7.25%  

3-year Tenure Interest Rate: 6.75%  

5-year Tenure Interest Rate: 6.50%  

No additional rate for super senior citizens

3. DBS Bank  

Highest Slab Interest Rate: 8.% (for 376 to 540 days)  

1-year Tenure Interest Rate: 7.50%  

3-year Tenure Interest Rate: 7.%  

5-year Tenure Interest Rate: 7.%  

No additional rate for super senior citizens

4. DCB Bank  

Highest Slab Interest Rate: 8.55% (for 19 months to 20 months)  

1-year Tenure Interest Rate: 7.60%  

3-year Tenure Interest Rate: 8.05%  

5-year Tenure Interest Rate: 7.90%  

No additional rate for super senior citizens

5. IDFC First Bank  

Highest Slab Interest Rate: 8.25% (for 400 days)  

1-year Tenure Interest Rate: 7.%  

3-year Tenure Interest Rate: 7.50%  

5-year Tenure Interest Rate: 7.25%  

No additional rate for super senior citizens

6. IndusInd Bank  

Highest Slab Interest Rate: 8.25% (for 1 year to 2 years)  

1-year Tenure Interest Rate: 8.25%  

3-year Tenure Interest Rate: 7.75%  

5-year Tenure Interest Rate: 7.75%  

No additional rate for super senior citizens

7. Karur Vysya Bank  

Highest Slab Interest Rate: 8.10% (for 760 days - Special Deposit)  

1-year Tenure Interest Rate: 7.40%  

3-year Tenure Interest Rate: 7.40%  

5-year Tenure Interest Rate: 7.40%  

No additional rate for super senior citizens

8. Karnataka Bank  

Highest Slab Interest Rate: 8.% (for 375 days)  

1-year Tenure Interest Rate: 7.85%  

3-year Tenure Interest Rate: 7.%  

5-year Tenure Interest Rate: 7.%  

No additional rate for super senior citizens

9. RBL Bank  

Highest Slab Interest Rate: 8.60% (for 500 days)  

1-year Tenure Interest Rate: 8.%  

3-year Tenure Interest Rate: 8.%  

5-year Tenure Interest Rate: 7.60%  

Additional 0.25% for super senior citizens on all tenures

10. SBM Bank India  

Highest Slab Interest Rate: 8.60% (for 391 days to 15 months)  

1-year Tenure Interest Rate: 7.55%  

3-year Tenure Interest Rate: 7.80%  

5-year Tenure Interest Rate: 8.25%  

No additional rate for super senior citizens

11. Tamilnad Mercantile Bank  

Highest Slab Interest Rate: 8.% (for 400 days)  

1-year Tenure Interest Rate: 7.50%  

3-year Tenure Interest Rate: 7.%  

5-year Tenure Interest Rate: 7.%  

No additional rate for super senior citizens

12. YES Bank  

Highest Slab Interest Rate: 8.50% (for 18 months)  

1-year Tenure Interest Rate: 7.75%  

3-year Tenure Interest Rate: 8.%  

5-year Tenure Interest Rate: 8.%  

No additional rate for super senior citizens

How is FD interest taxed?

In India, the tax on FDs depends on the interest earned rather than the principal. “The interest is added to your total income and taxed according to your income tax slab. TDS is deducted under Section 194A of the Income Tax Act," says Vijay Kuppa, CEO of InCred Money.

Here are key tax points:

— If you earn more than Rs 40,000 in interest (Rs 50,000 for senior citizens), the bank deducts 10% TDS.

— The rate rises to 20% if you don’t provide your PAN details.

— Those in the 30% tax bracket will have their FD interest taxed at the same rate.

If your total income is below the taxable threshold, you can submit Form 15G (or Form 15H for senior citizens) to avoid TDS deductions.

Kuppa also adds, “If you receive Rs 1,000 in interest, and 10% TDS is applicable, you would only receive Rs 900 after the deduction.” The bank then submits the deducted amount to the central government, fulfilling its tax obligations.