Key Summary
- FD rates have come down since early 2026, following RBI repo rate cuts, not risen. If you’ve seen older content citing higher rates, that reflects an earlier peak, not the current market.
- Public and private banks currently offer roughly 5.00% to 7.45%, depending on tenure and bank.
- Small Finance Banks lead on rate, several offering 8%+ on specific tenures, with DICGC insurance up to ₹5 lakh, same as any bank.
- NBFC FDs like Bajaj Finance and Shriram Finance offer competitive rates too, but aren’t covered by DICGC insurance at all.
- TDS applies above ₹50,000 interest a year (₹1,00,000 for senior citizens); submit Form 121 (which replaced Forms 15G/15H from April 2026) if your income is below the taxable threshold.
Have FD Rates Gone Up or Down in 2026?
Down. Following roughly 125 basis points of RBI repo rate cuts through late 2025 and into 2026, most banks have reduced their FD rates from where they stood earlier in the year. If you’re comparing quotes now against something you read a few months ago, don’t be surprised if today’s numbers are lower.
Current FD Rates: Public Sector Banks
| Bank | Approx. Rate Range |
|---|---|
| SBI | Up to 6.40% (2-3 year tenure); 6.45% on the special 444-day Amrit Vrishti scheme |
| Bank of Baroda | Broadly in the 5.00%-7.25% PSU range |
| Punjab National Bank | Broadly in the 5.00%-7.25% PSU range |
Public sector banks generally offer the most conservative rates in the market, in the 5.00% to 7.25% range depending on tenure, trading a lower yield for the reassurance of a government-backed institution.
Current FD Rates: Private Sector Banks
| Bank | Approx. Rate Range |
|---|---|
| HDFC Bank | Competitive within the 6.00%-7.45% private bank range |
| ICICI Bank | Among the higher-yielding private banks currently |
| Axis Bank | Competitive within the 6.00%-7.45% private bank range |
| Bandhan Bank | Among the higher-yielding private banks currently |
| Kotak Mahindra Bank | Competitive within the 6.00%-7.45% private bank range |
| IndusInd Bank | Up to 7.00%, confirmed directly from IndusInd’s own current rate card |
Private banks as a group currently span roughly 6.00% to 7.45%, with Bandhan and ICICI generally cited among the stronger performers. IndusInd, often mentioned as a market leader in older content, currently sits at 7.00% on its own official rate card, no longer the standout it once was.
Current FD Rates: Small Finance Banks
If maximising your rate is the priority, Small Finance Banks consistently lead the category:
- Suryoday Small Finance Bank: Around 8.25% on 5-year tenures for deposits below ₹3 crore
- Unity Small Finance Bank: Among the highest currently advertised, with some tenures reported above 9%
- Several other Small Finance Banks (Utkarsh, Shivalik, Slice) also regularly feature in the 7.5%-8.5%+ range on specific tenures
Small Finance Banks are RBI-regulated and covered by DICGC insurance up to ₹5 lakh per depositor, identical protection to any other bank. The trade-off is a shorter operating history and smaller scale than the large national banks, worth weighing if you’re placing a large sum.
NBFC Fixed Deposits: Bajaj Finance and Shriram Finance
NBFC FDs are a genuinely different category worth understanding on their own terms, since they’re frequently searched alongside bank fixed deposits but work differently underneath.
- Bajaj Finance: Currently 6.60% to 7.40% for regular depositors, rising to 6.95% to 7.75% for senior citizens, with the best rates typically on 31-60 month tenures, confirmed directly from Bajaj Finance’s own rate page.
- Shriram Finance: Competitive rates, often cited around 8% on select tenures.
The most important thing to understand about NBFC FDs: they are not covered by DICGC deposit insurance at all. That protection is specific to banks. An NBFC FD’s safety depends entirely on the financial strength and credit rating of the company itself, not a government-backed guarantee. This doesn’t mean NBFC FDs are unsafe, well-rated, established NBFCs like Bajaj Finance carry strong credit ratings, but it’s a fundamentally different risk profile than a bank FD, and worth factoring in before chasing the higher headline rate.
What Is the Best FD Tenure Right Now?
This varies by lender and shifts as rates move, so rather than naming a single “best” tenure, it’s worth checking a specific bank’s full tenure table before committing. In a falling-rate environment like the current one, some banks continue offering a relative premium on specific mid-length tenures (commonly in the 15-24 month range) to attract deposits, so it’s worth comparing a few tenure options at your chosen bank rather than assuming the longest term automatically pays the most, or that a shorter term always pays less.
How Are Senior Citizens Treated?
Most banks and NBFCs offer an additional 0.25% to 0.75% over the standard rate for depositors aged 60 and above, applied to the same FD products.
Is Your FD Safe?
For bank FDs, including Small Finance Banks, deposits are insured by the DICGC (a wholly-owned RBI subsidiary) up to ₹5 lakh per depositor, per bank, covering both principal and interest. If you’re holding a larger sum, splitting it across two or three banks keeps your full amount within this insured limit. NBFC FDs, as covered above, don’t carry this insurance, your protection there rests on the company’s own creditworthiness.
How Is FD Interest Taxed?
FD interest is fully taxable, added to your income and taxed at your applicable slab rate, regardless of whether TDS was deducted.
TDS thresholds: Banks deduct TDS at 10% once your interest income crosses ₹50,000 a year (₹1,00,000 for senior citizens), provided your PAN is linked, rising to 20% if it isn’t.
Form 121: If your total income falls below the taxable threshold, you can submit a declaration to avoid TDS altogether. From April 1, 2026, this is done through the new, unified Form 121, which replaced the older Forms 15G (for those below 60) and 15H (for senior citizens) under the Income Tax Act, 2025. If you’re filing for a period before this date, the older forms still apply.
Premature Withdrawal
Most banks and NBFCs charge a penalty, typically 0.50% to 1% off the applicable rate, if you withdraw before maturity. If you anticipate needing partial access to your funds, ask about a sweep-in FD, which allows partial withdrawal without breaking the entire deposit.
Frequently Asked Questions
What are the current FD interest rates in India?
Public and private banks currently offer roughly 5.00% to 7.45%, depending on the bank and tenure. Small Finance Banks offer meaningfully more, several above 8% on specific tenures. NBFCs like Bajaj Finance and Shriram Finance are also competitive, in a similar range to Small Finance Banks.
Which bank currently offers the best FD rate?
Among Small Finance Banks, Suryoday and Unity are currently among the strongest, with some tenures exceeding 8-9%. Among mainstream private banks, Bandhan and ICICI are generally competitive. Rates shift regularly, so confirm the current figure directly with the bank before booking.
Are Small Finance Bank FDs safe?
Yes, they’re RBI-regulated and covered by the same DICGC insurance (up to ₹5 lakh per depositor) as any other bank. They typically offer higher rates than large national banks, but with less operating history, worth considering for a portion of your savings rather than your entire deposit.
Is a Bajaj Finance or Shriram Finance FD covered by deposit insurance?
No. NBFC fixed deposits, including those from Bajaj Finance and Shriram Finance, are not covered by DICGC insurance. Their safety depends entirely on the company’s own financial strength and credit rating, not a government guarantee.
How is TDS calculated on FD interest?
Banks deduct 10% TDS once your interest income crosses ₹50,000 a year (₹1,00,000 for senior citizens), provided your PAN is linked to the account, rising to 20% if it isn’t.
What is Form 121, and do I need it?
Form 121 is the new unified self-declaration form, effective from April 1, 2026, that replaced the older Forms 15G and 15H. If your total income is below the taxable threshold, submitting Form 121 to your bank stops TDS from being deducted on your interest income.
Should I lock in a long-tenure FD right now?
Since rates have been declining through 2026, some investors are choosing to lock in current rates for a longer tenure rather than waiting, on the expectation that rates could fall further. This is a reasonable consideration, but not a guarantee, compare a specific bank’s full tenure table rather than assuming any single tenure is automatically best.
Can I withdraw my FD before it matures?
Yes, but most banks and NBFCs charge a penalty, typically 0.50% to 1% off the applicable interest rate, for premature withdrawal. A sweep-in FD, where available, allows partial withdrawal without breaking the full deposit.
Last Updated on 4 days ago by Team Paisaseekho
