Fixed deposits (FDs) remain one of the most secure and popular investment choices in India, offering guaranteed returns with minimal risk. Recently, several banks have revised their FD interest rates, with some offering up to 8.60% interest. If you’re looking to maximize your savings, now is the perfect time to explore the best FD options.
Understanding FD Interest Rates in 2025
FD interest rates vary depending on bank type, tenure, and investor category (general vs. senior citizens). Typically, small finance banks offer higher returns than commercial banks to attract deposits.
Here’s what you need to know:
- Major public sector banks (like SBI, HDFC, ICICI) offer 6.50% – 7.50% interest.
- Private banks & small finance banks offer higher rates, up to 9.00%.
- Senior citizens get 0.50% extra on most FD schemes.
Why Are FD Rates Increasing?
Banks adjust FD rates based on RBI’s monetary policy, inflation trends, and liquidity needs. Due to rising inflation and global economic factors, banks are offering higher interest rates to attract more deposits.
Best Fixed Deposit Interest Rates in India (2025)
For General Citizens
| Bank Name | Interest Rate (%) | Best Tenure |
| Unity Small Finance Bank | 9.00% | 1001 days |
| North East Small Finance Bank | 9.00% | 18 months – 3 years |
| Shivalik Small Finance Bank | 8.80% | 12-18 months |
| Suryoday Small Finance Bank | 8.60% | 5 years |
| Utkarsh Small Finance Bank | 8.50% | 2-3 years |
For Senior Citizens
| Bank Name | Interest Rate (%) | Best Tenure |
| Suryoday Small Finance Bank | 9.10% | 5 years |
| Unity Small Finance Bank | 8.65% | 5 years |
| North East Small Finance Bank | 8.50% | 5 years |
| Utkarsh Small Finance Bank | 8.35% | 5 years |
💡 Pro Tip: Small finance banks offer higher rates, but make sure the bank is covered under DICGC insurance (₹5 lakh per depositor).
How to Choose the Best FD in 2025?
1. Compare Interest Rates
Use bank websites or aggregators like Paisabazaar to check live rates.
2. Select the Right Tenure
Longer tenures generally offer higher rates, but shorter tenures (1-3 years) currently offer the best returns.
3. Look for Additional Benefits
- Senior citizens get extra 0.50% interest.
- Banks like SBI, ICICI offer special FD schemes for retirees.
4. Tax Considerations
- TDS (Tax Deducted at Source) applies if FD interest crosses ₹40,000 (₹50,000 for seniors).
- Opt for Tax-Saving FDs with 5-year lock-in for 80C tax deductions.
5. Safety Factor
- Prefer banks insured under DICGC.
- Stick to reputed banks for better financial security.
Additional Factors to Consider Before Investing in an FD
Liquidity Needs
FDs have a lock-in period, so ensure you don’t need emergency funds during the tenure. Consider sweep-in FDs, which offer partial liquidity.
Laddering Strategy
Instead of putting all your money in one FD, divide it across multiple tenures. This helps in earning better returns while keeping liquidity intact.
Premature Withdrawal Penalty
Most banks charge 0.5% – 1% penalty if you withdraw before maturity. Choose banks with low or no penalty if you might need funds earlier.
Auto-Renewal vs. Manual Renewal
Auto-renewals might lock your money in for a new tenure at a lower rate. Always review current rates before renewing.
FD Interest Rates (FAQs)
1. Which bank is offering the highest FD interest rate in 2025?
Unity Small Finance Bank & North East Small Finance Bank are offering 9.00% interest for 1001 days and 18 months-3 years, respectively.
2. Should I invest in a small finance bank FD?
Yes, if you want higher returns and keep the deposit within DICGC insurance limit of ₹5 lakh.
3. What is the best FD tenure for 2025?
The best tenure for maximum returns is 12 months to 3 years, offering 8.50% – 9.00% interest.
