Fixed deposits (FDs) are a popular investment option for Indian investors, especially those seeking safe and good returns on their savings. The main reason for their popularity is that FDs typically offer higher interest rates than savings accounts. Additionally, senior citizens benefit from higher interest rates, making FDs an attractive option for them. In this article, we will share all the details regarding the top banks offering the highest FD interest rates.

Fixed Deposit Interest Rates

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The interest rates on fixed deposits vary depending on the deposit period. Generally, longer-term FDs earn higher interest rates, while shorter-term FDs offer relatively lower rates.

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Latest Interest Rates Offered by Top Banks (As of December 2024)

  • HDFC Bank
    • General citizens: 7.4% for a 5-year deposit
    • Senior citizens: 7.9%
  • Kotak Mahindra Bank
    • 7.4% for general citizens and 7.9% for senior citizens on a deposit of 390-391 days. (Effective from June 14, 2024)
  • Federal Bank
    • 7.4% for general citizens and 7.9% for senior citizens on FDs of 777 days
  • State Bank of India (SBI)
    • 7% for general citizens and 7.5% for senior citizens on FDs of 2-3 years. (Effective from June 15, 2024)
  • Karnataka Bank
    • 7.5% for general citizens and 7.75% for senior citizens
  • Bank of Baroda (BOB)
    • 7.3% for 400 days and 7.8% for senior citizens (Announced on October 14, 2024)
  • Union Bank of India
    • 7.3% for general citizens and 7.8% for senior citizens on a 456-day FD
  • RBL Bank
    • 8% for general citizens and 8.5% for senior citizens
  • Bandhan Bank
    • 8.05% for general citizens and 8.55% for senior citizens
  • IndusInd Bank
    • 7.99% for general citizens and 8.49% for senior citizens

Things to Consider Before Choosing an FD

1. New Rules and Special Provisions

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The Reserve Bank of India (RBI) has issued new guidelines for fixed deposits in NBFCs and housing finance firms. Key updates include:

  • No penalty for small deposits: Premature withdrawal of amounts below ₹10,000 is now penalty-free.
  • Critical illness clause: Customers suffering from serious illnesses can withdraw their full FD amount early without penalty.

2. Premature Withdrawal and Penalty

  1. Many banks allow premature FD withdrawals, but a penalty is usually charged.
  2. The penalty is generally 0.5% to 1% and is deducted from the FD’s interest rate.