FD Calculator: How much will an amount of ₹5 lakh grow to if invested in a bank fixed deposit (FD) for 5 years?

Interest in bank fixed deposits (FDs) is once again on the rise, driven by the Reserve Bank of India’s (RBI) decision to increase interest rates. In its monetary policy announcement on October 7, the central bank raised the repo rate from 5.25% to 5.5%. Consequently, banks are also expected to increase the interest rates offered on FDs.

If you are planning to open a fixed deposit of ₹5 lakh for a tenure of 5 years, it is advisable to choose a bank that offers a higher interest rate. To make an informed decision, it is essential to compare the FD interest rates offered by small finance banks, public sector banks, and private sector banks.

Interest rates on FDs at Private Sector Banks

SBM Bank India: 7.65%
DCB Bank: 7.50%
Yes Bank: 7.25%
Kotak Mahindra Bank: 6.65%
IDFC First Bank: 7.10%
IDBI Bank: 6.55%
Axis Bank: 6.50%
HDFC Bank: 6.50%
ICICI Bank: 6.50%

Experts note that small finance banks are currently offering the highest interest rates on FDs. For instance, you could open a 5-year fixed deposit of ₹5 lakh with Suryoday Small Finance Bank at an annual interest rate of 8.25%. After 5 years, you would receive a total of ₹7,52,132, which includes ₹2,52,132 in interest.

For FDs exceeding ₹5 lakh, it is advantageous to spread the investment across different banks.

Experts suggest that those looking to invest more than ₹5 lakh in fixed deposits should consider distributing the amount across multiple banks rather than keeping it all in a single bank. The reason for this is that the maximum insurance cover for a fixed deposit (FD) in a bank is ₹5 lakh. This means that in the event of an untoward incident, bank depositors are reimbursed up to a maximum of ₹5 lakh. Even if a depositor has ₹10 lakh in an FD, they will still receive only ₹5 lakh as the insurance payout.

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