Best Fixed Deposit Rates in India (2026)
Fixed Deposits remain one of the safest investment options in India in 2026. Major banks like SBI, HDFC Bank, ICICI Bank and small finance banks are currently offering FD interest rates ranging from 6.25% to 9.10% depending on tenure and customer category. Senior citizens receive an additional 0.25%–0.75% interest. This guide compares the best fixed deposit rates in India, tenure-wise returns, tax-saving FDs, and the safest banks for fixed deposits.
What is the highest FD rate in India in 2026?
Muthoot Capital (NBFC) offers the highest rate at 9.10% p.a. (9.35% for senior citizens). Among scheduled commercial banks, Unity Small Finance Bank offers up to 9.0%. Large banks like SBI offer 6.25%–6.50% and HDFC Bank 6.25%–6.50% for general depositors. Senior citizens earn up to 7.05% at SBI and 7.10% at ICICI Bank.
What is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is a financial instrument offered by banks, small finance banks, and NBFCs where you deposit a lump-sum amount for a predetermined period at a fixed interest rate. Unlike a savings account where interest rates fluctuate, an FD guarantees a locked-in rate throughout the tenure — ensuring predictable, risk-free returns.
Your money earns compound interest (quarterly compounding for most banks) and at maturity, you receive the principal plus accumulated interest. FDs can range from as short as 7 days to as long as 10 years, making them suitable for both short-term goals and long-term wealth preservation.
Latest FD Rates in India — May 2026
Interest rates vary significantly across bank categories. With RBI repo rate at 5.25% (cut from 6.50% over 2024–2025), FD rates have moderated from their 2024 peaks but remain attractive relative to savings accounts.
All rates are indicative as of May 29, 2026 and subject to change at the bank's discretion. Always verify rates on the bank's official website before investing. NBFC deposits are not covered under DICGC insurance.
Best Bank FD Rates Comparison Table — May 2026
| Bank | Regular Rate | Sr. Citizen Rate | Best Tenure | Min. Deposit | Premature Exit | Safety |
|---|---|---|---|---|---|---|
| State Bank of India | 6.50% | 7.05% | 444 Days | ₹1,000 | Allowed (penalty) | ★ Highest |
| Bank of Baroda | 6.50% | 7.15% | 400 Days | ₹1,000 | Allowed (penalty) | ★ Highest |
| HDFC Bank | 6.50% | 7.00% | 3 Years | ₹5,000 | Allowed (penalty) | ★ Highest |
| ICICI Bank | 6.40% | 7.10% | 15–24 months | ₹10,000 | Allowed (penalty) | ★ Highest |
| Axis Bank | 6.50% | 7.00% | 1–2 Years | ₹5,000 | Allowed (penalty) | ★ Highest |
| IDFC First Bank | 7.50% | 8.00% | 18–24 months | ₹10,000 | Allowed (penalty) | ◆ High |
| IndusInd Bank | 7.75% | 8.25% | 12–24 months | ₹10,000 | Allowed (penalty) | ◆ High |
| Unity Small Finance Bank | 9.00% | 9.50% | 1 Year | ₹1,000 | Allowed (penalty) | ◆ DICGC ₹5L |
| Suryoday SFB | 8.50% | 9.00% | 5 Years | ₹1,000 | Allowed (penalty) | ◆ DICGC ₹5L |
| Bajaj Finance (NBFC) | 8.05% | 8.30% | 24–36 months | ₹15,000 | Limited options | ◆ CRISIL AAA |
| Muthoot Capital (NBFC) | 9.10% | 9.35% | Select tenures | ₹10,000 | Limited options | NBFC — Check |
Best FD Rates for Senior Citizens (60+ Years) — May 2026
Senior citizens (age 60 and above) receive an additional 0.25% to 0.75% per annum over regular rates at most banks. Some banks also offer a "super senior citizen" category for those aged 80+ with an extra 0.10%.
| Bank / Institution | Regular Rate | Senior Citizen Rate | Best Tenure | Extra Benefit |
|---|---|---|---|---|
| Unity Small Finance Bank | 9.00% | 9.50% | 1 Year | +0.50% over regular |
| Suryoday Small Finance Bank | 8.50% | 9.00% | 5 Years | +0.50% over regular |
| Shivalik Small Finance Bank | 8.10% | 8.60% | 1–2 Years | +0.50% over regular |
| Jana Small Finance Bank | 8.00% | 8.50% | 1–3 Years | +0.50% over regular |
| IndusInd Bank | 7.75% | 8.25% | 12–24 months | +0.50% over regular |
| IDFC First Bank | 7.50% | 8.00% | 18–24 months | +0.50% over regular |
| ICICI Bank | 6.40% | 7.10% | 3–5 Years | +0.70% over regular |
| Bank of Baroda | 6.50% | 7.15% | 400 Days | +0.65% over regular |
| SBI (We-Care scheme) | 6.50% | 7.05% | 5–10 Years | +0.55% over regular |
| HDFC Bank | 6.50% | 7.00% | 3 Years | +0.50% over regular |
If annual FD interest income is below ₹50,000, submit Form 15H to your bank to avoid TDS deduction. This applies if your total taxable income is below the exemption limit.
Public vs Private vs Small Finance Banks — FD Comparison
For optimal returns with safety: keep up to ₹5 lakh in a small finance bank FD (DICGC insured) and park larger amounts in SBI or HDFC Bank. This maximises yield without sacrificing DICGC protection.
Tax-Saving Fixed Deposits — Section 80C Benefits
Tax-saving FDs allow you to claim a deduction of up to ₹1.5 lakh per year under Section 80C of the Income Tax Act. They have a mandatory 5-year lock-in and cannot be withdrawn prematurely.
| Bank | Tax-Saving FD Rate | Sr. Citizen Rate | Lock-in | Section 80C |
|---|---|---|---|---|
| State Bank of India | 6.50% | 7.00% | 5 Years | ✓ Up to ₹1.5L |
| HDFC Bank | 6.50% | 7.00% | 5 Years | ✓ Up to ₹1.5L |
| ICICI Bank | 6.40% | 7.10% | 5 Years | ✓ Up to ₹1.5L |
| Axis Bank | 6.50% | 7.00% | 5 Years | ✓ Up to ₹1.5L |
| Bank of Baroda | 6.50% | 7.15% | 5 Years | ✓ Up to ₹1.5L |
| Punjab National Bank | 6.50% | 7.00% | 5 Years | ✓ Up to ₹1.5L |
While the principal investment qualifies for 80C deduction, the interest earned on tax-saving FDs is fully taxable as per your income tax slab. Small Finance Banks are generally NOT eligible to offer tax-saving FDs.
📊 Calculate Your Exact FD Returns
Use Arthzo's free FD Calculator to compute maturity amount, quarterly interest, and compare tenures — instantly.
Use Free FD Calculator →FD Returns Formula — How Interest is Calculated
Indian banks use quarterly compounding for most FDs. The maturity amount formula is:
Worked Example — ₹1 Lakh at 7.5% for 2 Years
📌 Calculation for ₹1,00,000 at 7.5% p.a. (Quarterly Compounding)
Notice that quarterly compounding earns slightly more than simple interest (which would give ₹15,000 on ₹1 lakh at 7.5% for 2 years). Use the Arthzo FD Calculator to compute exact maturity amounts for any principal, rate, and tenure combination.
Best Short-Term FD Rates in India (Under 1 Year)
Short-term FDs (7 days to 12 months) are ideal for parking emergency funds, quarterly bonuses, or awaiting investment opportunities. Rates are generally lower than 1-year+ FDs.
| Bank | 90 Days | 180 Days | 270 Days | Best Short-Term Tenure |
|---|---|---|---|---|
| SBI | 4.75% | 5.50% | 6.00% | 270 days |
| HDFC Bank | 4.50% | 5.75% | 6.00% | 6–9 months |
| ICICI Bank | 4.50% | 5.75% | 6.25% | 6 months–1 year |
| IndusInd Bank | 5.50% | 6.25% | 6.75% | 270–364 days |
| Unity Small Finance Bank | 6.00% | 7.00% | 7.50% | 180–270 days |
| Suryoday SFB | 5.75% | 6.50% | 7.25% | 180–364 days |
Best Long-Term FD Rates (3–10 Years)
Long-term FDs suit retirees, those saving for education funds, or investors locking in high rates before RBI cuts further. FD laddering across multiple tenures is an effective strategy.
FD Laddering Strategy — Maximize Returns + Liquidity
Instead of locking all funds in one FD, split across tenures:
Each tranche matures at a different time, giving you annual liquidity while maximizing average returns. When each tranche matures, reinvest at the prevailing rate.
| Bank | 3-Year Rate | 5-Year Rate | 10-Year Rate | Best Long-Term Pick |
|---|---|---|---|---|
| SBI | 6.50% | 6.50% | 6.50% | 5 Years (We-Care for Sr.) |
| HDFC Bank | 6.50% | 6.40% | 6.00% | 3 Years |
| ICICI Bank | 6.40% | 6.40% | 6.00% | 3–5 Years |
| IDFC First Bank | 7.25% | 7.00% | 6.50% | 3 Years |
| Suryoday SFB | 8.00% | 8.50% | 7.00% | 5 Years |
| Bajaj Finance | 8.05% | 7.75% | N/A | 2–3 Years |
FD Safety & DICGC Deposit Insurance
All bank FDs (including small finance banks) are protected up to ₹5 lakh per depositor per bank under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme — an RBI subsidiary. This covers both principal and accrued interest combined.
- 🏦Large PSU banks (SBI, BoB, PNB): Government ownership provides implicit sovereign backing beyond DICGC. Considered the safest option for large deposits.
- 🏢Large private banks (HDFC, ICICI, Axis): Highly regulated, strong capital adequacy ratios. DICGC coverage applies. Very safe for deposits up to ₹5 lakh.
- 🌱Small Finance Banks: Regulated by RBI, DICGC covered up to ₹5 lakh. Higher rates (8–9%) compensate for slightly lower stability than large banks. Spread deposits across SFBs if investing more than ₹5 lakh.
- 💼NBFCs (Bajaj Finance, Shriram): NOT covered by DICGC. Check CRISIL/ICRA credit rating (AAA is safest). Suitable only for investors who understand and accept the additional risk.
To maximize DICGC protection across multiple banks: if you have ₹20 lakh to invest, spread ₹5 lakh each across 4 different banks. This ensures all ₹20 lakh is fully insured. Joint account holders get separate ₹5L coverage per unique depositor combination.
Tax on FD Interest in India — Complete Guide
How FD Interest is Taxed
FD interest income is added to your total income and taxed as per your applicable income tax slab rate — whether you receive it annually or let it compound. There is no separate tax rate for FD interest.
| Annual FD Interest | TDS Rate | Who Deducts TDS | How to Avoid TDS |
|---|---|---|---|
| Up to ₹40,000 (general) / ₹50,000 (senior citizens) | No TDS | — | No action needed |
| Above ₹40,000 / ₹50,000 (if PAN provided) | 10% | Your bank | Submit Form 15G/15H |
| Above limit (if PAN NOT provided) | 20% | Your bank | Provide PAN immediately |
Form 15G and 15H — Zero TDS
- 📋Form 15G: For individuals below 60 years whose total income is below the taxable limit. Submit at the start of each financial year to avoid TDS.
- 👴Form 15H: For senior citizens (60+) whose estimated tax liability is nil. Allows full interest income without TDS deduction.
TDS is not final tax. If your slab rate is lower than TDS deducted (10%), claim a refund when filing ITR. If your slab is higher (20%–30%), pay the difference as advance tax or self-assessment tax to avoid interest under Section 234B/234C.
How to Choose the Best FD in 2026 — 6 Key Factors
- 1️⃣Define your goal and tenure: Short-term parking (under 1 year)? Emergency fund top-up? Retirement corpus? Match FD tenure to your actual cash-flow need — premature withdrawal penalizes returns.
- 2️⃣Compare effective yield, not just headline rate: A 7.5% quarterly-compounded FD yields more than a 7.5% annually-compounded one. Use the Arthzo FD Calculator to compare effective yields.
- 3️⃣Check safety first for large amounts: For amounts above ₹5 lakh, stick to large public or private banks. For amounts at or below ₹5 lakh, small finance banks offer excellent risk-adjusted returns.
- 4️⃣Consider tax impact: If you are in the 30% tax bracket, a 7.5% FD yields only ~5.25% post-tax. Compare with tax-free alternatives like PPF (7.1% tax-free) or debt mutual funds before choosing FD.
- 5️⃣Check premature withdrawal terms: Life is unpredictable. Choose banks that allow premature withdrawal (most do) with a reasonable penalty (0.5%–1%). Avoid locking all savings in illiquid FDs.
- 6️⃣Lock in rates now if you expect cuts: With RBI expected to cut rates further in 2026, locking in 3–5 year FDs at current rates (7.5%–9%) is a smart move before rates drop further.
Frequently Asked Questions
Muthoot Capital (NBFC) offers the highest FD rate at 9.10% p.a. for general customers and 9.35% for senior citizens as of May 2026. Among scheduled commercial banks, Unity Small Finance Bank leads with up to 9.0%. Large banks like SBI, HDFC, and ICICI offer 6.25%–6.50% p.a. for regular depositors.
State Bank of India (SBI) is considered the safest FD bank due to its government ownership and implied sovereign guarantee. All bank and small finance bank FDs up to ₹5 lakh per depositor per bank are insured by DICGC (an RBI subsidiary). NBFCs are NOT covered under DICGC.
Yes. FD interest is fully taxable as per your income slab. Banks deduct TDS at 10% if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). Tax-saving FDs (5-year lock-in) give Section 80C deduction up to ₹1.5 lakh on the principal, but the interest earned is still taxable. Submit Form 15G/15H to avoid TDS if your income is below the taxable limit.
Yes. Most banks allow premature withdrawal after completion of the minimum period (usually 7–30 days), subject to a penalty of 0.50%–1.00% on the applicable interest rate. Tax-saving FDs have a mandatory 5-year lock-in and cannot be withdrawn early. Alternatively, take a loan against your FD (up to 90% of FD value at 1–2% above FD rate) to meet liquidity needs without breaking the deposit.
Under the DICGC scheme, up to ₹5 lakh per depositor per bank is insured — including both principal and accrued interest. To maximize coverage: spread FDs across multiple banks if your investment exceeds ₹5 lakh. Joint accounts have separate coverage based on depositor combination.
Unity Small Finance Bank offers 9.50% for senior citizens, the highest among scheduled commercial banks. Among large banks, Bank of Baroda offers 7.15%, followed by ICICI Bank at 7.10% and SBI at 7.05%. Senior citizens can also consider Suryoday SFB (9.00%) and Jana SFB (8.50%) for higher yields within DICGC insurance limits.
Yes. Small finance banks are licensed and regulated by RBI and deposits are insured by DICGC up to ₹5 lakh per depositor. They offer 1–2% higher rates than large banks because they rely heavily on retail deposits to fund their lending. For amounts up to ₹5 lakh, they offer excellent risk-adjusted returns. For larger amounts, spread across multiple SFBs or stick to large banks.
A Fixed Deposit (FD) requires a one-time lump-sum investment. A Recurring Deposit (RD) lets you invest fixed monthly instalments. FDs generally offer 0.25%–0.50% higher interest than RDs of the same tenure. FDs suit investors with a lump sum; RDs suit those building savings systematically from income. Both are equally safe (DICGC insured).
Related Financial Tools on Arthzo
Ready to Calculate Your FD Returns?
Use Arthzo's free FD Calculator to instantly compute maturity amount, interest income, and compare tenures across banks — no login required.