Latest fixed deposit (FD) interest rates in banks in India

Given below are the top 10 banks offering the highest FD interest rates.

Given below are the 10 banks offering the highest FD interest rates.

Given below are the top 10 banks with highest 1-year bank FD interest rates.

Given below are the top 10 banks with highest 2-year bank FD interest rates.

Given below are the top 10 banks with highest 3-year bank FD interest rates.

Given below are the top 10 banks with highest 5-year bank FD interest rates.

Given below are the top 10 banks offering highest interest rates on tax-saving FDs.

Given below are the highest FD interest rates in 10 small finance banks.

Given below are the top 10 banks offering highest NRO bank FD interest rates.

Given below are the top 10 banks offering highest NRE bank FD interest rates.

The fixed deposit (FD) or term deposit is one of the most popular savings vehicles used by Indians. In an FD, the investor invests a lump sum amount with the bank or other financial institute like an NBFC or housing finance company for fixed tenure at a predetermined interest rate. At the end of the tenure of the FD, the investor receives the amount that was invested along with the compound interest.

An FD comes with assured returns (the interest rate is fixed at the time of opening the FD account) unlike market-linked investments. Even if interest rates fall after you open an FD, your FD will continue to receive same interest rate that was decided at the start. For interest payout you have various options. You can opt for a monthly or quarterly pay-out of interest or the reinvestment option.

Why should you invest in FD?

FDs are among the safest and most popular investment options available to risk averse investors, i.e., those with low risk appetite and want to steer clear of volatile investments like equity. FDs allow you to manage your financial risks and help fulfil your money goals. FDs can be used to achieve financial goals like securing your child's future, children's education and marriage, or as a hedge against unexpected expenses. FDs can also be used to build a corpus for any other life goals like retirement over a period of time.

Is FD interest taxable?

As per the Income Tax Act, 1961, interest earned on FDs is treated as 'income from other sources' and therefore it is fully taxable. It is to be reported under the head 'Income from Other Sources' in your ITR. The FD interest earned is included in an individual's gross annual income, and then the total tax liability for the year is calculated.

If the bank does not deduct TDS from your interest income, the total interest income earned from your fixed deposits in a particular financial year is to be added to your total income and pay tax on it.

The tax on FD interest is deducted as TDS at the time of credit of annual interest. Banks deduct tax at source at the time of crediting the interest to your account if the interest amount is above Rs 40,000 for individuals (for senior citizens this limit is Rs 50,000).

Do keep in mind that TDS is deducted at the time of credit of interest and not when the FD matures. So, if you have an FD for 3 years - banks will deduct TDS at the end of each year.

For an example, if you earn FD interest of Rs 100, the bank will deduct 10% TDS (Rs10) and deposit it to the government. While reporting the interest income in ITR, you have to report the entire interest earned of Rs 100 and claim the TDS deducted by the bank of Rs 10 as TDS refund or tax credit from the outstanding liability, as the case may be.

Special FD interest rates for senior citizen FD

Most banks and NBFCs offer an additional interest rate of up to 50 bps for senior citizens over the fixed deposit interest rates offered to regular individuals. However, these higher interest rates are only offered to resident senior citizen FD depositors. Some banks and NBFCs also offer additional interest rates of 20-30 bps, over and above the additional FD rates offered to senior citizens. However, the additional rates offered over and above the senior citizen FD interest rates are provided under special FD schemes for pre-determined tenures.

As per the law, these are the entities that can open a regular fixed deposit with a bank or other financial institution

1. Residents
2. Hindu undivided families
3. Sole proprietorship firms
4. Partnership firms
5. Limited companies
6. Trust accounts

What are the documents needed to open an FD?

If you are planning on investing in a fixed deposit, these are the documents the financial institution will typically require:

These are the documents a resident individual will have to submit:

• Recent photograph
• KYC documents
• Individual:
• PAN card
• Aadhaar Card
• Passport
• Driving License
• Voter's ID

These are the documents a Hindu Undivided Family (HUF) will have to submit:

• Self-attested PAN card
• HUF declaration deed
• HUF's Bank Statement

What are the different types of FDs?

Banks, non-banking financial institutions and small finance banks offer different types of FDs for investors to invest in. Fixed deposits vary on basis of nature of interest payout and specific purpose for which they are offered. Here is a look at some of the most common types of FDs offered.

1. Cumulative Fixed Deposit

• Interest is only available at the time of maturity
• Users are not eligible for interval-based interest
• Higher interest rate
• Suitable for people who are not looking for regular interest payment
• FD tenure ranges from 1 year to 5 year

2. Non-Cumulative Fixed Deposit

• Interest is paid at regular intervals
• The tenure of FDs ranges from one to five years
• In the case of a regular interest payout, one will be eligible for a lower amount at maturity
• Suitable for people who require a regular source of income in the form of interest

3. Senior Citizen FD

• For people over the age of 60
• Offers a higher rate of interest than other FDs
• Flexible tenure

4. NRIs FDs

• NRIs, OCIs, and PIOs with NRO accounts are eligible
• Higher rate of interest as compared to traditional savings accounts
• Fixed tenure
• Payment mode- NEFT/RTGS from NRO bank account

5. Tax Saving FDs

• Offered by most prominent banks
• Annual income tax deduction benefit of up to Rs. 1.5 lakh
• Lock in a period of 5 years, before that, the amount cannot be withdrawn
• One-time lump sum amount deposit

6. Flexi Fixed Deposit

• These FDs are linked to a savings account
• Designed to park excess surplus from saving/current account to fixed deposits through sweep-out facility
• Customers can pick the threshold and a surplus above it for booking FD
• Offers liquidity through sweep-in facility from FD to saving/current account
• Can be created with the initial deposit of choice and later be linked to the savings account
• Customers can limit their savings on savings accounts and the excess can be transferred to FD

When you invest money in an FD, it is deployed for a predetermined period of time. However, premature withdrawal of fixed deposits is an option, in case of emergency or unexpected expenses. You can withdraw your FD before the specified duration expires, as the phrase "premature withdrawal" implies. Although you are permitted to withdraw the FD before the deposit term expires, banks charge fees for early withdrawals. Banks charge a penalty when you withdraw from your bank FD before it matures. According to the terms and limitations provided by the bank, the penalty is normally imposed when you withdraw the FD during the allotted tenure. Penalty fees typically range between 0.5 and 1% of the interest rate.

Is it mandatory to have a nominee for an FD?

It is not mandatory to have a nomination for one's FD investments, however it is always advisable to have your nominations in place. If nomination is in place, it is easier for the bank to pay the amount lying in the deceased person's FD account to the nominated person.

According to the Union Bank website, these are the points one should keep in mind while making a nomination for their FD account:

• There can be only one Nominee for a deposit account whether held singly or jointly.
• A resident can nominate NRI as Nominee but the repatriation of amount will happen only after permission from RBI.
• A person legally empowered to operate a minor's account can file a nomination on behalf of the minor.
• Applicants can make nomination by filling up the Form prescribed under the Banking Companies(Nomination) Rules 1985
• The nomination details can be changed during the subsistence of the account relationship by filling up the Form prescribed under the Banking Companies (Nomination) Rules 1985

As per DICGC rules, each depositor in a bank is insured up to Rs 5 lakh for both the principal and interest amount on deposits held by him in that particular bank in same right and same capacity. This includes all deposits held by a person in current account, savings account, fixed deposits and so on. If the total of all the deposits held by an individual in a single bank exceed Rs 5 lakh, then he/she will be able to get Rs 5 lakh inclusive of principal and interest amount if the bank fails and RBI recommends liquidation/cancellation of bank's licence or enforces scheme of amalgamation/merger/reconstruction.

What kind of deposits are covered

1. DICGC covers all deposits such as savings, fixed, current, recurring and so on except for the following deposits:
2. Deposits of foreign governments;
3. Deposits of Central/State Governments;
4. Inter-bank deposits;
5. Deposits of the State Land Development Banks with the State co-operative bank;
6. Any amount due on account of and deposit received outside India
7. Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India

What if you have accounts at different branches of the same bank?

Currently, the insurance cover offered by the DICGC covers all different accounts of one depositor held with different branches of the same bank for a maximum of Rs 5 lakh. Therefore, if you have more than one account with the same bank (even if in different branches), then, too, you will be insured for Rs 5 lakh only.
However, the deposit insurance coverage limit is applied separately to the deposits in different banks. For instance, let us say you have an account with Bank A and Bank B. Then, both accounts will be separately insured up to Rs 5 lakh.

What about joint accounts?

As per the RBI, both single and joint accounts will be separately covered under the DICGC scheme.
Sample this: You have a savings account which is operated solely by you and another one jointly operated with your spouse. In case you bank fails, then in such a case, both the accounts will be separately insured under the deposit insurance scheme.

Banks are directly regulated by the RBI since they have been categorised as scheduled banks just like PSUs and other private sector banks by the central bank. Deposits opened with scheduled banks are protected by the deposit insurance program of DICGC. Having cumulative deposits (including fixed deposits) of up to Rs 5 lakh with each of these small finance banks is as safe depositing money with PSU and large private sector banks.

When a bank fails, the only respite a depositor has the insurance cover offered by the DICGC. This cover was raised to Rs 5 lakh from Rs 1 lakh, effective from February 4, 2020. As per DICGC rules, each depositor in a bank is insured up to Rs 5 lakh for both the principal and interest amount on deposits held by him in that particular bank. This includes all deposits held by a person in current account, savings account, fixed deposits and so on. If the total of all the deposits held by an individual in a single bank exceed Rs 5 lakh, then he/she will be able to get Rs 5 lakh inclusive of principal and interest amount if the bank goes bankrupt.

DICGC covers all deposits such as savings, fixed, current, recurring and so on except for the following deposits:

• Deposits of foreign governments;
• Deposits of Central/State Governments;
• Inter-bank deposits;
• Deposits of the State Land Development Banks with the State co-operative bank;
• Any amount due on account of and deposit received outside India
• Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India.