Bank FD rate for senior citizens: Several banks are still offering attractive fixed deposit (FD) interest rates of up to 9.1% for senior citizens on investments below ₹3 crore with a five-year tenure. However, some banks have started reducing rates after the RBI cut the repo rate by 25 basis points on February 7, 2025.
Below is a list of banks that continue to provide competitive FD interest rates for senior citizens.
Latest FD Interest Rates for Senior Citizens
9.1% Interest Rate
Suryoday Small Finance Bank offers a 9.1% interest rate on FDs maturing in five years.
8.65% Interest Rate
Unity Small Finance Bank offers an 8.65% interest rate on FDs with a five-year tenure.
8.5% Interest Rate
NorthEast Small Finance Bank offers 8.5% interest on five-year FDs.
8.35% Interest Rate
Utkarsh Small Finance Bank provides an 8.35% interest rate on FDs for senior citizens investing for five years.
8.2% Interest Rate
Jana Small Finance Bank offers an 8.2% interest rate on five-year FDs.
(Source: Paisabazaar, as of February 12, 2025)
Five-Year FDs & Tax Benefits for Senior Citizens
Senior citizens who file income tax under the old tax regime can benefit from tax deductions by investing in five-year fixed deposits.
Section 80C Tax Deduction: Senior citizens can claim up to ₹1.5 lakh as a tax deduction under Section 80C if they opt for the old tax regime. However, those following the new tax regime cannot avail of this deduction.
Additional Deduction Under Section 80TTB: They can deduct up to ₹50,000 annually on interest earned from FDs.
Tax Implications on FD Maturity: While these FDs offer tax-saving benefits, the maturity amount is subject to tax as per the applicable income tax slab of the investor.
Safety of Small Finance Bank FDs
Are These FDs Safe?
Deposits in small finance banks are insured by the Deposit Insurance Credit Guarantee Corporation (DICGC) up to ₹5 lakh (including principal and interest).
However, since small finance banks operate differently from scheduled commercial banks, investors should exercise caution while investing.
To reduce risk, financial experts advise keeping FD investments within DICGC’s coverage limit, ensuring better security for their funds.
Thus, Senior citizens looking for higher returns can consider these five-year fixed deposits, especially those offering up to 9.1% interest. However, they should evaluate tax benefits, safety factors, and financial needs before making an investment decision.
