Where can you get higher interest on FDs than what major banks offer? These 3 banks even outperform the Post Office..
FD Interest Rates: For a large segment of the population in the country, Fixed Deposits (FDs) remain a primary option for savings and investment. Many people still prefer to park their funds in FDs; however, before doing so, they typically check which institution offers the best returns. As for security, an RBI regulation ensures that deposits of up to ₹5 lakh are insured—meaning that even in the unlikely event of a bank failure, funds up to ₹5 lakh remain protected.
If you wish to earn a good return on your hard-earned money while keeping it secure, it is essential to compare the interest rates offered by various banks before opening an FD. According to recent data, major public and private sector banks are currently trailing in this regard, whereas Small Finance Banks are offering annual interest rates exceeding 8%. Three such banks stand out in this category.
Top 3 Banks Offering the Highest FD Interest Rates
Small Finance Banks are leading the way in terms of FD interest rates. Suryoday Small Finance Bank ranks first, followed by Ujjivan Small Finance Bank and Utkarsh Small Finance Bank.
Suryoday Small Finance Bank: Up to 8.25% annual interest
Ujjivan Small Finance Bank: Up to 8.10% annual interest
Utkarsh Small Finance Bank: Up to 8.10% annual interest
Please note that these rates may apply only to specific tenures. Therefore, be sure to check the terms and conditions, as well as the applicable tenure, before making an investment.
What Interest Rates Do Post Office Schemes Offer?
The interest rates for Post Office small savings schemes for the October–December 2026 quarter have been maintained at their previous levels. Among these, the Senior Citizen Savings Scheme (SCSS) and the Sukanya Samriddhi Yojana (SSY) offer the highest annual interest rate at 8.2%. However, both schemes are subject to specific eligibility criteria for investment. Other Post Office schemes also offer good returns:
National Savings Certificate (NSC): 7.7%
Post Office 5-Year Time Deposit: 7.5%
Kisan Vikas Patra (KVP): 7.5%
Monthly Income Scheme (MIS): 7.4%
Public Provident Fund (PPF): 7.1%
In the KVP, the invested amount doubles in 115 months. Meanwhile, the MIS is an option for investors who seek a regular monthly income.
How much higher is the interest compared to HDFC, Axis, and SBI?
Fixed Deposit (FD) rates at major private banks are lower than those offered by small finance banks. Kotak Mahindra Bank is offering 6.8%, HDFC Bank and Axis Bank are offering 6.6%, while ICICI Bank is offering up to 6.55% interest.
Among public sector banks, Bank of India is offering 6.85% interest on its special 500-day FD. PNB and Indian Bank are offering up to 6.8%, while Bank of Baroda and Canara Bank are offering up to 6.75%. Meanwhile, SBI’s interest rate for select tenures goes up to 6.45%.
Where can you get the highest returns on a 5-year FD?
If you are looking to invest for five years, Suryoday Small Finance Bank leads with an 8.25% interest rate on its FDs. This is followed by the Post Office NSC at 7.7% and the 5-year Time Deposit at 7.5%. Among major banks, HDFC Bank offers 6.6%, and SBI offers 6.05% interest on 5-year FDs.
Things to keep in mind before opening an FD
In a conversation with NDTV, Gurugram-based personal finance advisor CA Amit Kumar noted that choosing an FD solely based on a higher interest rate is not a sound decision. The high interest rates offered by small finance banks often apply to fixed deposits (FDs) for specific tenures. Therefore, before investing, one should carefully check the FD tenure, the penalty for premature withdrawal, and the interest payout options, in addition to the interest rate.
Disclaimer: This content has been sourced and edited from NDTV India. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
