Fixed deposit (FD) rates may have cooled, but senior citizens can still earn attractive returns — if they choose wisely.
After the Reserve Bank of India cut the repo rate by 125 basis points in 2025, most banks reduced FD interest rates.
This has worried many retirees who depend on FD income for their monthly expenses.
However, the latest data shows that some banks are still offering up to 7.75% to senior citizens in February 2026.
Here’s where you can find the best returns.
Private Banks Offering Up to 7.75%
Among private lenders, YES Bank currently offers the highest FD rate for senior citizens at 7.75%.
Other private banks offering competitive rates include:
Bandhan Bank – 7.70%
RBL Bank – 7.70%
IDFC FIRST Bank – 7.50%
IndusInd Bank – 7.50%
Private banks are clearly offering a premium compared to public sector banks in the current rate cycle.
Public Sector Banks: Slightly Lower but Stable
Among PSU banks, Bank of Baroda leads with 7.00% for senior citizens.
Other major PSU banks include:
Punjab National Bank – 6.90%
Central Bank of India – 6.75%
Bank of Maharashtra – 6.70%
Union Bank of India – 6.70%
While the rates are slightly lower, many retirees prefer PSU banks due to perceived stability and trust.
How Big Is the Difference?
The gap between the highest private bank rate (7.75%) and the top PSU rate (7.00%) is 0.75 percentage points.
On a ₹10 lakh FD for one year, this could mean around ₹7,500 more in annual interest before tax.
For retirees, that difference can matter.
Is Your Money Safe?
All bank deposits are insured up to ₹5 lakh per customer per bank under the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI.
This ₹5 lakh limit includes both principal and interest.
If you have more than ₹5 lakh to invest, consider splitting deposits across multiple banks to maximise insurance coverage.
Smart FD Tips for Senior Citizens
Before locking your money, keep these points in mind:
Check tenure carefully.
The highest rate is often for specific periods like 444 or 555 days.
Understand premature withdrawal penalties.
Some banks charge 0.5%–1%.
Choose monthly or quarterly interest payout if you need regular income.
Remember that FD interest is fully taxable.
Submit Form 15H if eligible to avoid TDS.
Don’t chase high rates blindly.
Balance returns with safety and diversification.
The Bottom Line
FD rates have come down after last year’s repo rate cut. But senior citizens can still earn up to 7.75% if they compare options carefully.
The key is not just finding the highest rate — but balancing returns, safety, liquidity, and tax impact.
For retirees relying on fixed income, even a small rate difference can make a meaningful impact over time.
