Fixed deposits are a safe investment option that guarantees consistent interest rates, special interest rates for senior citizens, various interest payment options, and no market-related risks, with income tax deductions. It is important to compare the latest fixed deposit rates among leading banks in the country before opening a new fixed deposit or renewing an existing one. Here are the latest fixed deposit rates for the year 2021.
However, now, FD interest rates have started touching multi-year lows after the pandemic outbreak last year – something that has been bothering investors, and RBI’s announcement to keep the key policy rate unchanged at 4% is not good for FD investors. Most of the banks are offering anywhere between 3%-5.50% p.a. on normal FDs (for non-senior citizen depositors) up to 5 years amounting to less than Rs 1 crore (check table below for details). Only a few private and small finance banks are offering between 5.75%-7.50% p.a. on regular FDs with select tenures.
Fixed Deposit is one of the favored guaranteed-return providing investment avenues for many individuals. The span of the FD can range from 7 days to 10 years. Bank Fixed Deposits provide assured returns and you can receive interest income on a monthly, quarterly, or annual basis. In a cumulative FD, interest earned is periodically reinvested in the principal amount, which earns you more returns. As you earn interest on the interest earned throughout the financial year, your income will be higher.
FD rates offered by key banks on deposits up to Rs 1 crore:
| Bank | 6 months- 1 year(%) | 1-2 years(%) | 2-3 years(%) | 3-5 years(%) | 5 years and above(%) | Senior Citizen(%) |
| DCB Bank | 5.95 | 6.05-6.70 | 6.5 | 6.75 | 6.75 | 4.75-7.25 |
| Yes Bank | 5.50-5.75 | 6.25-6.50 | 6.5 | 6.75 | 6.75 | 4.00-7.50 |
| IndusInd Bank | 4.5-5.75 | 6.5 | 6.5 | 6.5 | 6.75 | 4.50-6.80 |
| RBL Bank | 5.25-5.75 | 6.5 | 6.5 | 6.25-6.75 | 6.25 | 5.75-7.25 |
| Karur Vysya Bank |
4.75-5 |
5.5 |
5.5 |
5.65 |
5.65-6 |
6-6.15 |
| Union Bank of India | 4.30-4.50 | 5.25-5.30 | 5.30-5.50 | 5.50-5.55 | 5.55-5.60 | 3.50-6.10 |
| Karnataka Bank | 5.2 | 5.3 | 5.30-5.55 | 5.55 | 5.55-5.70 | 3.80-5.95 |
| Canara Bank | 4.45 | 5.2 | 5.4 | 5.5 | 5.5 | 4.50-6.14 |
| Axis Bank | 4.5-5.15 | 5.10-5.25 | 5.4 | 5.4 | 5.5 | 4.5-5.90 |
| South Indian Bank | 5 | 5.4 | 5.4 | 5.5 | 5.5 | 5.50-6 |
| Federal Bank | 3.75-4.40 | 5.10-5.35 | 5.35 | 5.35 | 5.5 | 5.70-6.20 |
| SBI |
4.4 |
5 |
5.1 |
5.3 |
5.4 |
3.40-6.20 |
Fixed Deposit Interest Rates of Top 10 Banks in India for below Rs.2 crore
Given below are the latest interest rates offered by top banks for tenures ranging from 7 days to 10 years as of February 2021.
| Name of Bank | For General Citizens (p.a.) | For Senior Citizens (p.a) |
|---|---|---|
| State Bank of India | 2.90% to 5.40% | 3.40% to 6.20% |
| ICICI Bank | 2.50% to 5.50% | 3.00% to 6.30% |
| HDFC Bank | 2.50% to 5.50% | 3.00% to 6.25% |
| Punjab National Bank | 3.00% to 5.30% | 3.75% to 5.80% |
| Canara Bank | 2.95% to 5.50% | 2.95% to 6.00% |
| Axis Bank | 2.50% to 5.50% | 2.50% to 6.00% |
| Bank of Baroda | 2.90% to 5.30% | 3.40% to 6.30% |
| IDFC Bank | 2.75% to 5.75% | 3.25% to 6.25% |
| Bank of India | 3.25% to 5.30% | 3.75% to 5.80% |
| Corporation Bank | 3.00% to 5.40% | 3.50% to 5.90% |
Bank fixed deposits are considered safe because all commercial banks including branches of foreign banks functioning in India, local area banks, and regional rural banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Each depositor in a bank is insured up to a maximum of Rs 5 lakh for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank’s license or the date on which the scheme of amalgamation/merger/reconstruction comes into force
For example, if an individual had a principal account of Rs 4.94 lakh plus accrued interest of 5,000, the total amount insured by the DICGC would be Rs 4.99 lakh. Remember that if the principal amount is Rs 5,00,000 then the interesting part will not be covered as it will be above the insurance limit per bank.
Earnings on bank deposit interest attract tax in the form of Tax Deducted at Source (TDS). Prior to paying the interest to the receiver, the banker deducts TDS from the interest on deposits. If the total interest on such deposits exceeds Rs 40,000 per year per bank branch per individual or Rs 50,000 in the case of an elderly person, TDS is levied on bank deposits. If you fall below the tax slab and apply Form 15G or 15H to the bank to claim TDS-free income, TDS will not be deducted from the bank.
