Before locking your money into a fixed deposit (FD), it’s essential to compare interest rates across banks. Returns vary widely depending on the institution and the tenure. In most cases, banks offer better returns for longer durations and senior citizens often receive additional interest too. Senior citizens frequently receive a higher rate (often 0.25–0.50% more) than general depositors.

Lets have a look at some attractive offers. (Rates as of October 2025)

Small Finance Banks (Offer the Highest FD Rates)
 

Small finance banks continue to lead when it comes to attracting depositors with high FD rates—especially for senior citizens.

1. ESAF Small Finance Bank is offering 8.10% for a 444-day tenure.

2. Jana Small Finance Bank offers 8.00% for deposits above 2 years up to 3 years, and also for 5-year tenures.

3. Utkarsh Small Finance Bank offers up to 8.15% for deposits between 2 and 3 years. 

Private Sector Banks 

While they don’t reach the highest rates of some SFBs, private sector banks are still offering competitive returns:

1. Bandhan Bank: ~7.70% for 2-to-less-3-year tenure.
2. DCB Bank: ~7.70% for 37–38 months, plus an extra 0.05% for depositors aged 70+.
3. RBL Bank: ~7.70% for 18 months–3 years; super senior citizens get an extra 0.25%.
4. YES Bank: ~7.75% for deposits from 3 years up to less than 5 years.

Public Sector Banks (Offer Moderate Returns)

Public sector banks typically offer slightly lower rates than the best SFBs:

1. Bank of Maharashtra: ~7.20% for 366-day tenure.
2. Central Bank of India: ~7.25% for 2,222 or 3,333-day tenures.
3. Indian Bank: ~7.20% for 444 days, plus an extra 0.25% for super senior citizens.
4. Indian Overseas Bank: ~7.20% for 444 days, plus 0.25% for those aged 80+.

Tax Rules on FD Interest

Interest earned on fixed deposits is taxable. Banks will deduct Tax Deducted at Source (TDS) once annual interest crosses a certain threshold. According to the Budget 2025 changes:

1. General citizens: TDS threshold raised to ₹ 50,000 (earlier ₹ 40,000).
2. Senior citizens: Threshold now ₹ 1,00,000.

• E.g., if Pankaj (28 years old) earns ₹ 75,000 interest from FD,  thenTaxable portion = ₹ 25,000 (since threshold is ₹ 50,000)
• TDS @10% on excess → ₹ 2,500 would be deducted.
• If his total income remains below ₹ 2.5 lakh, no further tax applies.
• He may also submit Form 15G at the start of the financial year to avoid TDS if eligible.

If you’re looking for higher FD returns, small finance banks are currently the top choice—but check the bank’s credibility and DICGC insurance cover. Senior citizens can benefit especially from tenure-based higher rates. Always compare tenures, institutions, and tax implications—not just the headline rate. Use Form 15G/15H where applicable to avoid unnecessary TDS deductions.
Keep a balanced approach because while higher rates are attractive, safety and liquidity also matter.