Senior citizens’ bumper interest in FD! Senior investors have a fantastic chance here because some banks still pay up to 9.1% interest on 5-year FDs. However, several banks have already begun lowering interest rates since the Reserve Bank of India (RBI) dropped the repo rate by 25 basis points (BPS) on February 7, 2025. Tell us which banks still have these attractive rates.
Which banks provide the highest interest rates?
Interest rate: 9.1%.
In addition, seniors may apply for 9.1% interest on 5-year FDs from Suryoday Small Finance Bank. This is among the highest rates any bank offers.
Interest rate: 8.65%.
Unity Small Finance Bank offers a 5-year FD with an 8.65% interest rate.
8.5% interest rate
Senior investors can get 8.5% interest rates on a 5-year FD from Northeast Small Finance Bank.
8.35% interest rate
Utkarsh Small Finance Bank offers 5-year fixed deposits with 8.35% interest.
8.2% interest rate.
Senior citizens can apply for 8.2% interest on a 5-year FD at Jana Small Finance Bank.
Tax savings advantage on 5-year FD
Senior folks could get tax exemptions of up to Rs 1.5 lakh under section 80C by investing in a 5-year FD under the old tax system. However, investors embracing the revised tax system would not be exempt.
Apart from this, under section 80TTB, senior citizens may enjoy an exemption on interest income of up to Rs 50,000 every financial year. Still, the tax will be paid at the maturity of the FD according to the tax slab.
Before funding small finance banks, one should exercise caution.
The Deposit Insurance Credit Guarantee Corporation (DICGC) guarantees small financing institutions’ deposits up to Rs 5 lakh in insured value. Despite the risks, experts advise investors to be cautious with their investments. These banks have a business model different from conventional ones, which could result in varying risks.
