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What is Fixed Deposit

A fixed deposit is a financial investment instrument offered by banks and non-bank financial businesses that allows investors to deposit money and earn a higher interest rate than a conventional savings account. In India, fixed deposits are the most popular investment option. FDs have been associated with investing for many years because they are regarded safe, give assured returns over time, and are flexible in terms of duration.

Fixed deposits (FDs) are best for investors that have a low-risk tolerance. However, to invest in the bank or NBFC with the best FD rates, one needs to verify and compare interest rates.

Benefits of an FD

  • Low risk: Market risks have no effect on your fixed deposit returns.
  • Insurance: The RBI insures your deposits up to Rs.1 lakh.
  • Loan against FD: You can borrow up to 90% of your deposit amount at extremely low-interest rates. This is usually around 2% higher than the FD interest rate.
  • Simple liquidity: In the event of an emergency, you can quickly liquidate your FD and release the funds.
  • Regular income: You can have the interest amount credited to your account on a monthly, quarterly, or annual basis.
  • Tax advantages: Investing in tax-saving fixed deposits can result in tax deductions of up to Rs.1.5 lakh per fiscal year.
  • Senior citizens: When compared to regular customers, senior citizens are offered a higher interest rate.
  • High-interest rates: Earn interest on your deposits and enjoy your savings growth.

Fixed Deposit rates by Bank

Banks

Interest Rate (per annum)
Axis Bank

Up to 5.75%

Allahabad Bank

Up to 5.25%
Andhra Bank

Up to 5.6%

Abhyudaya Co-operative Bank Ltd.

Up to 6%
Bank of Baroda 

Up to 5.25%

Bank of India

Up to 5.3%
Bank of Maharashtra

Up to 4.9%

Bandhan Bank

Up to 5.5%
Bajaj Finserv

Up to 6.5%

Canara Bank

Up to 5.5%
Central Bank of India

Up to 5.1%

Corporation Bank

Up to 5.6%
Citibank

Up to 3.5%

Cosmos Bank

Up to 5.8%
Dena Bank

Up to 5.25%

DBS 

Up to 5.5%
Dhanlaxmi Bank

Up to 5.6%

Deutsche Bank

Up to 6.25%
ESAF Small Finance Bank

Up to 6.5%

Federal Bank

Up to 5.5%
Fincare Small Finance Bank

Up to 6.5%

HDFC Bank

Up to 5.5%
HSBC Bank

Up to 4%

ICICI Bank

Up to 5.5%
Indusind Bank

Up to 6.5%

IDBI Bank

Up to 5.25%
Indian Bank

Up to 5.25%

Indian Overseas Bank

Up to 5.25%
IDFC First Bank

Up to 6%

J&K Bank

Up to 5.3%
Jana Bank

Up to 6.75%

Kotak Mahindra Bank

Up to 5.3%
Karnataka Bank

Up to 5.6%

Karur Vysya Bank

Up to 6%
LIC Housing Finance Ltd.

Up to 5.75%

Oriental Bank of Commerce

Up to 5.25%
Punjab National Bank

Up to 5.25%

PNB Housing 

Up to 6.7%
RBL Bank

Up to 6.6%

SBM Bank India Ltd. 

Up to 6.5% 
State Bank of India

Up to 5.4%

Standard Chartered Bank

Up to 5.4%
Syndicate Bank

Up to 5.5%

Shriram Transport Finance

Up to 7.95%
Saraswat Bank

Up to 5.85%

South India Bank

Up to 5.65%
Sundaram Finance Bank

Up to 6.22% 

Suryodaya Small Finance Bank

Up to 6.75%
Tamilnad Mercantile Bank

Up to 5.75%

United Bank of India

Up to 6.5%
Union Bank

Up to 5.6%

Ujjivan Bank

Up to 6.75%
UCO Bank

Up to 5%

Utkarsh Small Finance Bank

Up to 7%
Vijaya Bank

Up to 5.25%

YES Bank

Up to 6.5%

 

Highest Fixed Deposit Rate in 2021

Fixed deposits, also known as FDs, are one of India’s most popular investment options. Individuals that have a little to no risk appetite and seek assured returns on their investments choose it. Muthoot Capital now offers the highest FD rate, which is 8% for a 5-year term. For regular citizens, Utkarsh Small Finance Bank, Suryodaya Bank, and Jana Bank are now offering the best FD rates of 6.75 percent. RBL, SBM, YES, and Indusind, among India’s leading banks, provide 6.5 percent for normal consumers and up to 7.25 percent for senior citizens.

Small finance banks are currently offering greater interest rates than most large banks, as may be observed. While some customers may prefer to invest in large, well-established banks, they should be aware that deposits made in Small Finance Banks (as well as commercial banks) are insured by the Deposit Insurance and Credit Guarantee Corporation’s depositor insurance program (DICGC). This means that bank deposits of up to Rs. 5 lakh, including fixed, recurring, savings, and current accounts, are guaranteed per depositor per bank (commercial and small finance banks).

 

FAQs:

What are the minimum and maximum deposit amounts for a Fixed Deposit?

Banks and NBFCs have different minimum amounts. It usually ranges from 1000 to 25,000 dollars. The greatest amount that can be put in a Fixed Deposit has no upper limit.

Is a Fixed Deposit a Taxable Investment?

Yes, interest collected on a savings account is taxed. If the amount of interest earned surpasses 5000 per year, TDS is deducted. To prevent tax deduction, you might submit form 15G/H to the bank or NBFC.

Is it possible for me to invest in a fixed deposit?

If you are in the following categories, you can invest in a fixed deposit:
Undivided Hindu Family (HUF).
Partnership Firms, Limited Companies, and Group Companies
Sole traders
Resident Indians.
Associations, Clubs, and Societies.
Family Trusts.
Minors (through their natural or legally appointed guardian).

What is a loan against a fixed deposit?

Instead of breaking your Fixed Deposit, you can take out a loan against the amount you have deposited. The sanctioned amount is typically 70-90 percent of the fixed deposit amount, with a competitive interest rate.

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