Bank Fixed Deposit Rate of Interest

Fixed Deposit Interest Rates of 41 Indian Banks (updated)

There are over ₹1,30,00,000 crores of fixed deposits in scheduled commercial banks. Most banks have different interest rates for varying tenors. In this post, I have compiled the fixed deposit interest rates for investments less than ₹2 crores for 41 banks in India. Further, I have presented a fixed deposit calculator you can use to find your maturity amount.

A large part of Indian household wealth is in fixed deposits held by banks in India. The banks further use these fixed deposit amounts to lend out money to institutional and individual borrowers.

In this post, we look at the fixed deposit rates of many Indian banks that they offer for the general and senior citizen category. The FD rates are updated until January 2020.

Fixed Deposit Interest Rate for GENERAL CATEGORY

Fixed Deposit Interest Rate for SENIOR CITIZEN CATEGORY

Banks offering the Highest FD rates

The following banks are currently offering the highest interest rates on fixed deposit.

  1. IDFC First Bank
  2. Yes Bank (pulled out from list due to current issues)
  3. DCB Bank
  4. RBL Bank
  5. Lakshmi Vilas Bank
  6. Jana Small Finance Bank
  7. Ujjivan Small Finance Bank

Updated information on the interest rates including the terms and conditions is available in the bank website. I am providing the link from where you can access the information. You can find additional information such as interest rates for deposits over ₹2 crores, premature withdrawal penalty etc.

Private Banks

Public Sector Banks

Small Finance Banks

Foreign Banks

*IOB offers an additional 0.25% over the senior citizen rates to Super Senior Citizens (aged 80 years and above)

Best Features & Benefits of a Fixed Deposit

Fixed deposits offer a number of benefits to investors. In addition to assured savings, fixed deposits are feature-rich and an attractive investment option. Fixed deposits help plan one’s medium and long-term goals.

Here are some of the major benefits of fixed deposits –

  1. Attractive Interest Rates which are far higher than those offered in saving accounts
  2. Low Deposit Amount with fixed deposits starting from as low as ₹500
  3. Multiple Tenures ranging from 7 days to 10 years
  4. Flexible Interest Withdrawal allowing investors to receive interest every month, every quarter, annually or be invested until maturity
  5. Easy Investing via Net Banking and Branches for greater convenience
  6. Premature Withdrawal of fixed deposit is permitted
  7. Nomination Facility is available
  8. Overdraft Facility (or Loan Against Fixed Deposit) is available

Things to Consider while Choosing a Bank Fixed Deposit

  1. Interest Rate. Higher the interest rate, the more you earn. Interest rates on fixed deposits vary from bank to bank on the basis of their cost of fund, tenure offered and how much deposits the bank wants to attract
  2. Credibility of the Institution. Banks, NBFCs (non-banking financial companies) and corporates offer fixed deposits. The safety of your principal and timely payment of the interest should be your most important consideration.
  3. Ease of Operating – Go for institutions that allow multiple platforms to operate your account. The ones offering online banking convenience should be preferred. This will allow you to invest and liquidate a fixed deposit with ease. 

Why are fixed deposits so popular in India?

  1. Fixed Deposits are ideal for investors with a low-risk appetite. Infact, as of September 2019, deposits in scheduled commercial banks stood at whooping ₹1,30,00,000 crores.
  2. The most distinguishing feature of a fixed deposit is the safety of the principal amount and a guaranteed return. The interest rate getting locked for the duration when booking the fixed deposit is much appreciated.
  3. For senior citizens, the fixed deposit is most popular instrument. It promised an assured return which can be pullout out on monthly or quarterly frequencies. Banks offer a higher rate of return to these senior citizens
  4. Not known to most, fixed deposits offer tax benefits under Section 80C. This is available for a 5-year term under the tax saver option. 
  5. Fixed deposits also offer necessary liquidity as most of them offer premature withdrawals. Most investor appreciate this feature.
  6. A variation of fixed deposits is recurring deposit. The recurring deposit builds a savings habit by automatically investing a fixed amount at predetermined intervals. This sustained investment helps millions of investors each month to reach their goals.

Fixed Deposit Calculator

To calculate the maturity value of a fixed deposit, you need four inputs –

  1. Principal (how much money you want to invest?)
  2. Interest Rate
  3. Interest Compounding Schedule (monthly, quarterly or yearly)
  4. Period of Investment in Months

Formula for Calculating Fixed Deposit

Fixed Deposit Maturity Calculation Formula
Use this formula for calculating the maturity amount of your fixed deposit

where,

  • A = Maturity Amount
  • P = Invested Amount or Principal
  • r = Rate of Interest
  • n = Period of Investment

OK. Can you help me with an example?

Sure! I am keen on investing ₹1,00,000 in a 3 year fixed deposit with SBI. Now, SBI is currently offering me an interest of 6.10% for a 3 year tenure with a quarterly compounding.

If we apply this to our formula, it will come to –

Formula for calculating the maturity amount of an investment which is compounded quarterly
Formula for calculating the maturity amount of an investment which is compounded quarterly

Maturity = ₹1,00,000 * [ 1 + (6.10% / 4) ] ^ [3 * 4]

Maturity = ₹1,19,915

So much math!

How do I calculate this?

You can do this by using an excel sheet. Or simply open up your Chrome tab or Google search page and type in the formula in the search bar

Calculating the maturity amount of an investment in SBI Fixed Deposit at an interest rate of 6.10% which is compounded quarterly
Calculating the maturity amount of an investment in SBI Fixed Deposit at an interest rate of 6.10% which is compounded quarterly

Most Commonly Asked Questions on Fixed Deposits

What are the eligibility criteria to open a fixed deposit account?

To open a fixed deposit account, one needs to be an Indian national or non-resident India. Minors, under guardianship, can open fixed deposits.

What documents are required to open a fixed deposit account?

Opening a fixed deposit account requires some simple documents aimed at establishing the account holder’s age, signature, address etc. If you have an Internet banking account, then booking a fixed deposit is even simpler and it can be done with a couple of clicks. One or two of the below documents are enough to book a fixed deposit – 

  • Secondary School Leaving Certificate
  • Voters Identity Card
  • Birth Certificate issued by the competent authority
  • Passport
  • Government ID Card (with cardholder’s photo, signature and date of birth)
  • PAN Card

Is TDS applicable on fixed deposits? And when is it deducted?

Fixed deposits investors become liable for paying TDS when the cumulative interest earned for all deposits held in a particular customer ID is over ₹40,000 in a financial year. In the case of senior citizens, this amount is ₹50,000. Even deposits held by minors are subject to TDS.

TDS is deducted every time any bank pays interest during a financial year or if it reinvests the interest. This is as per the provisions of the Income Tax Act which get amended from time to time. So do check with your bank or tax consultant on the same.

Sometimes, the amount of TDS might be higher than the interest amount. If that happens to be the case, then the same can be recovered by the bank from the principal of the deposit. 

At what rate is TDS deducted on fixed deposits?

The TDS rates applicable on fixed deposits are –

This comes with a caveat. If the person receiving any income on which TDS is deductible does not furnish his/her PAN, then TDS shall be deducted at the rate of 20% for resident individuals & domestic companies. The rate is 31.2% (plus surcharge wherever applicable) in case of NRO or foreign company deposits.

This rule is applicable if the interest income is ₹10,000 or above during the financial year.

How and when can fixed deposit investors apply for exemption on TDS?

Fixed deposit investors can inform the bank to not deduct TDS on the deposits if their total interest income for the year is within the basic exemption limits.

For example, the basic exemption limit as per the Income Tax Act for FY19-20 is ₹2,50,000. This means, if the depositor’s annual income is less than ₹2,50,000 (₹3,00,000 in case of senior citizens), the depositor is liable to pay no taxes.

In this case, the depositor must submit Form 15G or 15H at the beginning of the year. This informs the bank to not deduct any TDS from the interest income. If this is not done, then the depositor will have to file for a refund at the end of the year.

Additional Resources You Might Like

  1. 5 Steps process on how to start SIP investment online
  2. The best SIP plans to invest in 2020
  3. Complete Investor Guide to Building Wealth with SIP
  4. SIP Calculator
  5. How to choose the right term insurance plan for yourself

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