Top 5 Indian Banks with the Highest FD Interest Rates

Also popular as term deposit, fixed deposits are most of the people’s favourite. The reason is they guarantee safe returns than the equities. FD comes with a pre-decided fixed term where you let your money to grow. The returns are fix and known even at the time of investment, which are not common in case of equities.

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Indian banks offer fixed deposits at the various rate of interests. Hence, it is always recommended to keep your money in an FD account rather keeping it idle in a savings account. Moreover, you can earn a higher rate of interest than a savings account.

If you are too willing to park your money in a fixed deposit account and earn higher interest, here’re a few tips before you sign above the dotted line!

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The Opening Formalities

Term deposit or fixed deposit account can be opened with a bank in which you already have a savings account. There are also provisions to open a fixed deposit account without having opened a savings account. To complete the account opening formalities you’ll have to undergo the KYC formalities with the bank, in case you can open an FD account without opening a savings account.

You will have to submit some of the required documents such as self-attested copies of ID proof, address proof(PAN Card, Adhaar Card, Voter Id), along with passport-sized photographs. The original documents need to be shown to the bank official at the time of account opening for verification purpose.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

How much to be invested?

The minimum amount to be invested in a fixed deposit account is Rs.10,000. However, depending on the bank norms, it may vary. You can invest up to a maximum of Rs. 1.5 lakh in a year.

FD Tenure

Fixed deposit tenure is the time period up to which your money can be parked in a fixed deposit account. After that tenure, the account matures and the returns can be availed with interests. Although, FD tenure may vary from one bank to another, usually the minimum tenure of FD is 7 days to a maximum of10 years. As per the chosen tenure, the money will be locked for a fixed year. However, in case of an unavoidable emergency, you can partially withdraw your invested money, but at a cost.

Interest on FDs

Though FD has a fixed rate of interest, it depends on the period for which the money is invested. In simple word, it may vary from bank to bank. Moreover, senior citizens are likely to avail higher rate of interest that the general category. The FD interest payment can be chose from cumulative or non-cumulative interest option.

In case of a cumulative option, the rate of interest is re-invested and to be paid at the time of maturity along with the FD principal amount.
One the other hand, in case of non-cumulative option, the interest rate is deposited as a certain pay-outs on regular intervals as per the chosen options decided at the time of opening the account. You can choose from the options of receiving the interest on monthly, quarterly, half-yearly or annually basis.

FD and Taxation

Interests to be earned on FD are fully taxable as per the prevailing tax laws. The rates are equal to the current tax slabs. Bank deducts TDS if the interest payment in a single fiscal year exceeds Rs. 10,000. However, you can adopt for tax saving instruments to save on taxes.

Premature Withdrawals Clause

One of the most amazing features of FDs is premature withdrawal. It is true that your money is fixed for a particular period, though, in case of emergencies a certain amount can be withdrawn from the account. However, a penalty is to be imposed as per the bank’s norms. Hence, while investing in FDs, you must consider the rules regarding pre-mature withdrawals. Sometime, pre-mature withdrawal facility may not be offered by the bank.

One Account, Multiple Facilities

You may not be aware that a loan can be availed through your FD account. You can use this account as collateral while applying for a loan. The loan amount to be sanctioned will depend on a certain percentage of the FD principal deposit. However, the percentage may differ from bank to bank.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Choose a Nominee

Nominee facility is available with FD. You can choose a nominee which should be someone from blood relation such as son, daughter or spouse.

Opt for Auto-renewal!

At the time of investment, in case no particular instruction is given, banks mostly renew the FD automatically, for the same tenure. For instance, let’s imagine you have invested Rs. 10000 for a tenure of 5 years in the FD account. If no instruction is given from your end at the time of account opening, the bank may renew the FD for another 5 years. However, any action will be taken after a proper intimation only. For automatic renewal, you have to choose this option in the account opening form. If you haven’t selected the option before and want to opt for this, you can contact the branch while your FD is approaching maturity.

Online Banking

With the advent of the internet, all banking services can be availed online without a hassle. Opening an FD account is no exception! All you need is to be active in net banking. Just visit the official website of your bank, go to the FD options, choose one, fill the online form, deposit the money online. Here is your FD account. Just make sure, to avail the printed FD receipt will not be offered in case of online FD opening process.

Now that you know how an FD account can be opened, here are some of the banks offering FDs at lucrative rate of interests:

Bank Name

FD Rate of Interest (%)

Rates for Senior Citizen


DCB Bank



3 years

RBL Bank



2 years to less than 3 years

Yes Bank



1 year 10 days to 1 year 20 days

IndusInd Bank



Exceeding 1 year 4 months to less than 2 years

IDFC First Bank



1 year 1 day to 2 years

To Conclude!

Fixed deposits are the safest and strategic investment tool that is beneficial in achieving the dual goal of regular income and building corpus. Well, with little or no risk to the investors.

Written By: PolicyBazaar - Updated: 13 September 2022
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