The Reserve Bank of India (RBI) has raised the key interest rates for five consecutive times, totaling 225 basis points, since May last year.
These hikes led to higher lending rates as well as higher interest rates on fixed deposits (FDs). Now with the RBI likely to press the pause button on rate hikes as of now, the depositors are recommended to lock the FDs at the prevailing high rates to make the most of them.
Investing in FDs is one of the most sought-after investment options among risk-averse investors and senior citizens.
Various banks offer competitive FD interest rates on varying amounts and tenures, in order to generate a substantial return on investment without jeopardising the principal amount.
Let’s look at the compasion list of the fixed deposit interest rates offered by top 5 banks with the tenures between 7 days to 10 years for an amount below ₹2 crore.
| Bank | Interest | Senior Citizens |
| RBL Bank | 3.50% to 7.80% | 4.00% to 8.30% |
| IDFC First Bank | 3.50% to 7.75% | 4.00% to 8.25% |
| KVB Bank FD | 4.00% to 7.50% | 5.90% to 8.00% |
| Yes Bank FD | 3.25% to 7. 75% | 3.75% to 8.25% |
| IndusInd Bank FD | 6.25% to 7.75% | 6.75% to 8.25% |
Note: The latest fixed deposit interest rates are as of 06 June, 2023
Senior citizens are entitled to earn a higher rate of interest i.e., 50 basis points more than what is offered to the younger investors.
Moreover, interest earned on fixed deposits is taxable under the Income Tax Act of 1961. If the interest exceeds ₹40,000 (Rs. 50,000 for Senior Citizens) in a financial year, TDS is deducted on income earned on fixed deposits.
In case you have already shared your PAN card details with the bank, the bank will deduct 10% TDS on interest income.
Additionally, if yourtotal income in a financial year is lower than that of minimum taxable amount, you can avail exemption from the TDS. But make sure to submit form 15G (15H for senior citizens) to the bank to avoid this deduction.
