by admin | May 6, 2024
Fixed deposits, or FDs, are regarded as a secure investment choice since they offer a variety of interest payment options, income tax benefits, exclusive interest rates for elderly citizens, zero market-related risks, and continual interest rates. However, it’s crucial to weigh a variety of considerations before investing in an FD. These factors include default risk, term offered, prepayment penalty, and many more. Let’s find out more about bank FD rates and fixed deposits in the following section.
Table of Contents
What is a fixed deposit?
A fixed deposit (FD) is a financial instrument which allows a person to grow a lumpsum over a fixed tenure at a fixed interest rate. A fixed deposit offers special interest rates for senior citizens, various interest payment options, and zero market-related risks.
One can choose to get the interest on a periodic basis, or at maturity. Typically, the intrinsic criterion for an FD is that the money cannot be withdrawn before maturity, but may attract a penalty if withdrawn prematurely.
FD Interest Rates of Top 20 Banks
Below is a table that defines the top 20 banks and their interest rates on fixed deposits as of 2024.
| Bank Name | Highest FD Interest Rate (%) | Lowest FD Interest Rate (%) | Monthly FD Interest Rate (%) |
| SBI | 7.6 | 3.5 | 3 |
| Axis Bank | 7.85 | 3 | 3.5 |
| ICICI Bank | 7.2 | 3 | 3 |
| HDFC Bank | 7.25 | 3 | 3 |
| PNB | 7.25 | 3.5 | 3.5 |
| Canara Bank | 7.25 | 4 | 4 |
| Bank of Baroda | 7.25 | 4.25 | 4.5 |
| IndusInd | 7.75 | 3.5 | 3.5 |
| Yes Bank | 7.75 | 3.25 | 3.7 |
| UCO Bank | 6.1 | 4.5 | 4.5 |
| RBL Bank | 8.1 | 3.5 | 4 |
| Bank of India | 6 | 4.5 | 3 |
| IDFC First Bank | 7 | 4.5 | 3 |
| AU Small Finance Bank | 8 | 3.75 | 3.75 |
| Post Office FD | 7.5 | 6.9 | |
| Equitas Small Finance Bank | 8.5 | 3.5 | 3.5 |
| Ùnion Bank of India | 6.5 | 3 | 3.5 |
| Bandhan Bank | 7.85 | 3 | 3.5 |
| Karnataka Bank | 5.8 | 4 | 3.5 |
| Karur Vysya Bank | 6.65 | 5.25 | 4 |
Types of Fixed Deposits
Standard term deposits
The most popular kind of FD that is offered by all banks is this one. The bank pays you interest on a specified amount of money you deposit for a predetermined period of time, either at regular intervals or at maturity. The bank sets the interest rate in advance, which varies according to the amount invested and the duration.
Senior citizen fixed deposits:
These are FDs designed specifically for senior citizens. They offer higher interest rates than standard FDs and are available to individuals aged 60 years and above.
Flexi fixed deposit
These are FDs created especially with senior persons in mind. They are available to people 60 years of age and older, and they offer higher interest rates than normal FDs.
Recurring deposit
With this kind of FD, you can take money out of your account without violating the terms of the FD. The interest rate is computed on the outstanding amount, and you are not penalized for withdrawals up to a predetermined amount.
Tax-saving FD
One kind of fixed deposit account that provides a tax deduction under Section 80C of the Income Tax Act, 1961 1 is a Tax-Saving Fixed Deposit (FD). Any investor who funds a tax-saving fixed deposit account is eligible to deduct up to Rs. 1.5 lakh annually. This kind of FD has a five-year lock-in term, and the interest is taxable.
Cumulative FD
The interest that is earned in cumulative FD is reinvested in the FD account. At the conclusion of the tenure, the principal amount as well as the accrued interest are disbursed. This is ideal for investors looking for greater profits without having to pay out interest on a regular basis.
Non-cumulative FD
Depending on the investor’s preference, the generated interest under this type of FD is paid to them on a monthly, quarterly, half-yearly, or annual basis. For investors searching for a reliable source of income, it is a good option.
Salient Features of Fixed Deposits (FDs)
A fixed deposit’s features may differ slightly based on the bank or other financial institution and the particular terms and conditions provided by them. Fixed deposits typically come with the following features:
Features of Fixed Deposit
Fixed Tenure A fixed deposit’s term is predetermined and might range from seven days to ten years. You can select a tenure when you start a savings account.
Minimum Deposit Requirement:- Banks typically have minimum deposit requirements in order to open a fixed deposit. The minimum amount may vary depending on the kind of institution.
Fixed Interest Rate:- The interest rate on a fixed deposit is fixed at the time the account is opened and will remain that way throughout the chosen tenure.
Premature Withdrawal:- Although fixed deposits have a lock-in period, in case of an emergency, many banks allow early withdrawal. On the other hand, penalties or lower interest rates may result from this.
Frequency of Interest Payment:- You have the option to select how often interest payments are made. The interest can be paid to you quarterly, semi-annually, annually, or on a monthly basis.
Nomination Facility:- In the event of the account holder’s passing, the money will be sent to the nominee they have chosen.
Joint Fixed Deposit:- It is possible to open a joint fixed deposit with your spouse, a business partner, or a family member. :
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Types of Interest on Fixed Deposits
Interest on a fixed deposit can be computed using one of two methods: compound interest or simple interest. Depending on the deposit size and term, banks may employ both.
Simple Interest
The equation for Simple Interest (SI) is “principal x rate of interest x time period divided by 100” or (P x R x T/100).
whereas,
P= Principal amount; R = Rate of interest per annum; T= No. of periods (in years)
Example,
Now, if you invest INR 10,000 at 8% p.a. for 5 years, the interest calculation will be like this.
Step 1: 10,000 x 8 x 5 = INR 4,00,000.
Step 2: Now divide that by 100. You get INR 4,000.
So, the interest you earn for 5 years is INR 4,000.
Hence, if you put in INR 10,000 in a Fixed Deposit with a simple interest rate of 8% p, you can get a total amount of INR 14,000 after 5 years.
Compound Interest
By using this method, interest is paid on both the principal and the interest. Compound interest is offered by many banks on fixed deposit accounts, but you need make sure the interest rate is competitive.
For instance, let’s say a bank gives 8% p.a. with annual compound interest on a 5-year deposit. Thus, if you invest 10,000 INR, the interest can be calculated as follows:
First Year
First, for the first year, we employ the simple interest technique.
10,000 x 8 x 1/100 = 800 INR
Thus, INR 800 is the interest that was earned in the first year.
This sum is applied to the principal once more. Thus, the second year’s principal is INR 10,800.
Second Year
In the upcoming second year, your earnings will be INR 10,800 x 8%.
10,800 × 8 x 1/100 = 864 INR
You receive interest of INR 864. This is added back to the principle once more. Your deposit now amounts to INR 11,664.
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Fixed Deposit Interest Rate Calculation
Calculating interest on fixed deposits is very easy, given you have the investment amount, interest rate, and investment tenure. The basic formula is:
A= P(1+r/n)^n*t
whereas,
A = Maturity Amount,
P = Principal Amount,
r = Rate of Interest,
t = Duration of FD, &
n = Compounded Interest Frequency
Eligibility Criteria For Fixed Deposits
The below-mentioned entities can choose to open a fixed deposit account in India:
- Residents
- Hindu undivided families (HUF)
- NRI
- Minors
- Senior citizens
- Companies
- Individuals or joint investors
- Societies or clubs
- Sole proprietorship
- Partnership firms
- Trust accounts
Bank FD Rates for Senior Citizens
Senior citizen fixed deposit (FD) plans are term deposit options that offer outstanding interest rates to persons who are 60 years of age or older. In addition to providing an extra interest rate of up to 0.25% p.a., these fixed deposit accounts provide senior citizens with a host of other advantages. In their post-retirement years, seniors may find a steady and dependable income stream via regular interest payouts. They are also able to borrow against the FD if necessary.
Below is a FD rates table for senior citizen as of 2024.
| Bank Name | FD Interest Rate for Senior Citizens |
| Axis Bank | 3.50% to 7.75% |
| Bandhan Bank | 3.75% to 8.35% |
| Bank of Baroda | 4.75% to 7.65% |
| Canara Bank | 4.00% to 7.75% |
| Central Bank of India | 4.00% to 7.25% |
| HDFC Bank | 3.50% to 7.75% |
| ICICI Bank | 3.50% to 7.65% |
| IDBI Bank | 3.50% to 7.50% |
| IDFC FIRST Bank | 3.50% to 8.25% |
| IndusInd Bank | 4.25% to 8.25% |
| Karnataka Bank | 3.90% to 7.65% |
| Kotak Mahindra Bank | 3.25% to 7.80% |
| Punjab National Bank | 4.00% to 7.75% |
| RBL Bank | 4.00% to 8.50% |
| South Indian Bank | 3.40% to 7.90% |
| State Bank of India | 4.00% to 7.50% |
| Tamilnad Mercantile Bank | 5.25% to 7.50% |
| UCO Bank | 3.15% to 7.00% |
| Union Bank of India | 3.50% to 7.75% |
| YES Bank | 3.75% to 8.25% |
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FAQs on Bank FD Rates
Check out different FAQs regarding to Bank FD Rates here.
Q.1. Who are allowed to invest in fixed deposits in India?
Ans:- All resident individuals, partnerships, governments, local bodies, Hindu Undivided Families (HUF), private and public limited companies, societies, etc can invest in a fixed deposit in India.
Q.2. Does a fixed deposit give monthly interest rate?
Ans:- Yes, you can get a monthly interest on your fixed deposit if it is non-cumulative.
Q.3. Is it possible for minors to open a fixed deposit?
Ans:- Yes, children may apply for a fixed deposit as co-applicants with a parent or guardian. When a minor (those under ten years old) opens a Post Office Time Deposit or Fixed Deposit, the account can be managed by a guardian until the minor becomes eighteen.
Q.4. What is the TDS rate on fixed deposit interest?
Ans:- The TDS rate is 10% for any resident Indian investors whose firm FD interest income exceeds Rs. 5,000 The financier will be charged a 20% TDS deduction on FD interest if PAN information is not supplied.
Q.5. How can I open a fixed deposit online?
Ans:- You can open a fixed deposit online by visiting the bank’s website or through its mobile application.
Q.6. What is the minimum lock-in period for a tax-saving FD?
Ans:- A tax-saving fixed deposit comes with a lock-in period of 5 years.
Q.7. What is the minimum deposit required to open a fixed deposit?
Ans:- Generally speaking, banks and NBFCs establish a minimum initial deposit of Rs. 1,000 for FDs. While some sizable private sector banks have a minimum deposit requirement of Rs 5,000, public sector banks may have lower minimum deposit requirements.
Q.8. Is it mandatory to quote my PAN details while opening a FD?
Ans:- Yes, when apply for a fixed deposit, you must provide your PAN. If you are not a company or firm, you must submit a properly filed Form 60/61 if you do not have a PAN.