If you are planning to invest in Fixed Deposits (FDs), you may not need to depend only on large public sector banks.
Many Small Finance Banks (SFBs) are currently offering much higher interest rates, giving investors a chance to earn better returns.
While major government banks are offering FD interest rates between 6.45% and 6.75%, some small finance banks are offering up to 8.1% for general customers and up to 8.5% for senior citizens.
This means investors can earn up to 1.65% more interest compared to many public sector banks.
Small Finance Banks Lead in FD Interest Rates
According to an analysis of FD rates of 28 banks and NBFCs by Stable Money, small finance banks are currently offering the highest returns.
The banks offering the highest FD interest rates for general customers include:
Suryoday Small Finance Bank: 8.10%
Utkarsh Small Finance Bank: 8.10%
Jana Small Finance Bank: 7.85%
Ujjivan Small Finance Bank: 7.75%
Northeast Small Finance Bank: 7.75%
Unity Small Finance Bank: 7.75%
Bandhan Bank: 7.45%
Six out of the top seven banks offering the highest FD rates are small finance banks, showing their strong position in the FD market.
Private Banks Also Offering Attractive Returns
Small finance banks are not the only ones offering competitive rates. Several private banks have also increased their FD interest rates to attract customers.
Currently:
Bandhan Bank offers up to 7.45% for general customers.
IndusInd Bank offers 7% on three-year FDs and up to 7.75% for senior citizens.
IDFC FIRST Bank, Yes Bank, and RBL Bank offer rates around 7.2% to 7.25%.
Experts say banks regularly revise FD rates depending on liquidity requirements and expected changes in interest rates.
Public Sector Banks Offer Lower FD Rates
Compared to small finance and private banks, interest rates at public sector banks remain lower.
Among government banks:
Bank of Baroda: Up to 6.75%
Bank of India: Up to 6.70%
Punjab National Bank: Up to 6.60%
Indian Overseas Bank: Up to 6.60%
State Bank of India (SBI): Up to 6.45%
Many public sector banks are currently offering their highest rates on special tenure FDs, generally ranging between 444 and 555 days, rather than traditional one-, three-, or five-year deposits.
Senior Citizens Can Earn More
Senior citizens get additional interest benefits on fixed deposits.
Some of the highest FD rates for senior citizens are:
Shivalik Small Finance Bank: 8.5%
Unity Small Finance Bank: 8.5%
Jana Small Finance Bank: 8.3%
Ujjivan Small Finance Bank: 8.3%
Suryoday Small Finance Bank: 8.25%
Utkarsh Small Finance Bank: 8.25%
Among major banks, Bank of India offers up to 7.45% for senior citizens, while Axis Bank and Bank of Baroda offer up to 7.25%.
NBFCs Also Offer Good FD Returns
Some Non-Banking Financial Companies (NBFCs) are also offering attractive FD rates.
Current rates include:
Shriram Finance: 7.5% for general customers and 8% for senior citizens
Mahindra Finance: 7.45% for general customers and 7.8% for senior citizens
Bajaj Finance: 7.4% for general customers and 7.75% for senior citizens
However, these rates are still lower than the highest returns offered by some small finance banks.
Don’t Choose an FD Only Based on Interest Rate
Although higher interest rates look attractive, experts advise investors to consider other factors before choosing an FD.
Important things to check include:
Bank’s financial stability
Investment duration
Withdrawal rules
Liquidity options
Deposit insurance coverage
Deposits in eligible banks are insured up to ₹5 lakh per bank under DICGC rules.
Experts suggest that spreading investments across different banks and choosing different FD periods can help balance safety and returns.
Fixed deposits remain a popular choice for investors looking for stable returns, but selecting the right bank is equally important as choosing the highest interest rate.
