20+ Banks Offering 8% or Higher Interest on Fixed Deposits (FD)

One of the safest and most popular investment choices for conservative Indian investors for a long time has been fixed deposits (FDs). Many public and private banks are currently offering FDs at 8% or higher due to rising interest rates, which makes it a great option for investors who are risk averse and want consistent earnings.

Also Read: FD vs SIP in Mutual Funds: Which is Better for Long-Term Financial Growth?

Why Are Interest Rates on FDs Increasing?

The following factors contributed to the spike in FD rates:

• RBI’s Monetary Policy – To combat inflation, the Reserve Bank of India (RBI) has maintained a relatively high repo rate, forcing banks to provide competitive FD rates.
• Liquidity Management – To attract deposits and maintain liquidity, banks have increased interest rates on FDs.
• Bank Competition – As small finance banks (SFBs) offer higher interest rates, larger banks have followed suit in an effort to retain deposits.

Top Banks Offering 8% or More Higher Interest rates on Fixed Deposits (FDs)

Several public sector, private sector, and small finance banks (SFBs) are currently offering FD rates above 8% for different tenures. Here’s a look at some of them:

(Rates are indicative and subject to change. Please check with the respective banks before investing.)

Small Finance Banks:

• Unity Small Finance Bank: 9.00% for 1001 days
• NorthEast Small Finance Bank: 9.00% for tenures ranging from 18 months and 1 day to 36 months
• Suryoday Small Finance Bank: 8.60% for 5 years
• ESAF Small Finance Bank: 8.38% for 888 days
• Jana Small Finance Bank: 8.25% for 1 to 3 years
• Equitas Small Finance Bank: 8.25% for 888 days
• Ujjivan Small Finance Bank: 8.25% for 12 months
• AU Small Finance Bank: 8.10% for 18 months
• Utkarsh Small Finance Bank: 8.50% for 2 to 3 years; 1500 days

Private Sector Banks:

• Bandhan Bank: 8.05% for 1 year
• RBL Bank: 8.00% for 500 days
• YES Bank: 8.00% for 18 months
• IDFC First Bank: 7.90% for 400 to 500 days
• DBS Bank: 7.50% for 376 to 540 days

Foreign Banks:

• Deutsche Bank: 8.00% for periods above 1 year up to 3 years

Note: Interest rates are subject to change. It’s advisable to verify the current rates with the respective banks before making investment decisions.

Why This Is Beneficial for FD Investors

• Higher Guaranteed Returns – Unlike market-linked investments, FDs provide assured returns with no risk of capital loss.
• Senior Citizen Benefits – Most banks offer an additional 0.5% interest to senior citizens, taking rates beyond 9% in some cases.
• Ideal for Short-Term Parking – Investors looking for safe and high-yielding short-term options can benefit from these attractive FD rates.

Tax Implications of FDs

Interest earned on FDs is taxable as per the investor’s income tax slab. Banks deduct Tax Deducted at Source (TDS) if the interest income exceeds ₹40,000 per annum (₹50,000 for senior citizens). To prevent TDS, eligible individuals can submit Form 15G or 15H, declaring that their total income is below the taxable limit.

Should You Invest in These FDs Now?

Due to high interest rates and the stable nature of FDs, this is an excellent time to lock in higher returns. However, if inflation falls, RBI might cut rates in the future, which could reduce FD rates. Therefore, investors should consider laddering FDs across different tenures to maximize returns.

Conclusion

Now, FD investors have one of the best chances to increase their risk-free returns, with more than 20 banks offering interest rates of 8% or higher. The bigger banks are also providing competitive rates, however small finance banks are leading the way. Investors should compare rates, check the credibility of banks, and align their investment strategy accordingly.

Article origional source: https://www.business-standard.com/finance/personal-finance/over-20-banks-offering-8-and-more-interest-rate-boon-for-fd-investors-125020600189_1.html

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