In recent times, there has been a series of interest rate cuts offered by banks on fixed deposits (FDs). Many banks revised their FD interest rates after the repo rate cut announcement by the Reserve Bank of India (RBI) in April, including the Punjab National Bank and the State Bank of India, among others. While more rate cuts are expected in the coming months, FD interest rates for senior citizens still remain quite high, around 8.25% at many banks.
Several banks offer attractive interest rates for FDs less than ₹3 crore and for a short-term tenure to senior citizens. Additionally, senior citizens can now enjoy a higher threshold for TDS deduction on FD interest, which came into effect from April 1, 2025.
Here are some private sector banks offering FD interest rates over 8% to senior citizens:
IndusInd Bank: IndusInd Bank offers interest rates ranging from 4% to 8.25% to senior citizens. The highest rate of 8.25% is offered for deposits with a tenure of over 15 to 16 months.
Bandhan Bank: Bandhan Bank offers FD interest rates between 3% to 8.25% to senior citizens. The highest interest rates are for a one-year term.
YES Bank: YES Bank offers interest rates between 3.75% and 8.25% to senior citizens. The highest rate (8.25%) is for a tenure between 36 to 60 months.
RBL Bank: RBL Bank offers interest rates ranging from 4% to 8.25% to senior citizens. The highest rate is for a tenure of 500 days.
Some small finance banks also offer attractive FD interest rates to senior citizens, like AU Small Finance Bank, which offers interest rates between 4.25% and 8.25% to senior citizens. The highest interest rate by the bank (8.25%) is for a tenure of 18 months.
North East Small Finance Bank offers the highest interest rate of 9% to senior citizens for a tenure of 18 months 1 day to 18 months 2 days.
Public sector banks offer a comparatively lower rate of interest on FDs to senior citizens. The Central Bank of India offers interest rates up to 8% to senior citizens, while the Bank of Maharashtra offers up to 7.95%.
Top 5 private sector, public sector and small finance banks offering the highest interest rates on FDs to senior citizens:
Top 5 Private Sector Bank FDs
| Bank Name | Highest Interest Rate (%) |
|---|---|
| SBM Bank | 8.55 |
| Bandhan Bank | 8.25 |
| DCB Bank | 8.25 |
| IndusInd Bank | 8.25 |
| RBL Bank | 8.25 |
Top 5 Public Sector Bank FDs
| Bank Name | Highest Interest Rate (%) |
|---|---|
| Central Bank of India | 8.00 |
| Bank of Maharashtra | 7.95 |
| Indian Overseas Bank | 7.80 |
| Indian Bank | 7.80 |
| Canara Bank | 7.75 |
Top 5 Small Finance Bank FDs
| Bank Name | Highest Interest Rate (%) |
|---|---|
| Suryoday Small Finance Bank | 9.10 |
| Unity Small Finance Bank | 9.10 |
| North East Small Finance Bank | 9.00 |
| Utkarsh Small Finance Bank | 8.75 |
| Shivalik Small Finance Bank | 8.70 |
Note: These rates are as of May 7, 2025 and applicable to deposits below ₹2 crore.
Data: Paisabazaar
Higher TDS threshold for senior citizens
As announced in the Union Budget 2025, banks will now deduct TDS only if the total interest earned by a senior citizen exceeds ₹1 lakh in a financial year, from ₹50,000 previously. This is applicable per bank, so interest income is considered separately across banks.
Senior citizens with income below the taxable limit can submit Form 15H to their banks to prevent paying TDS on interest even if their interest income exceeds ₹1 lakh in a year. So, if a senior citizen earns interest over ₹1 lakh on FD but has a total income below ₹12 lakh, they can fill the self-declaration form (Form 15H) and avoid TDS.
