Fixed Deposit (FD) is again in the spotlight as small finance banks are offering up to 9% bumper interest rates. In times when inflation is high and stock markets are uncertain, FD is becoming a safe and attractive option for many investors. Unlike risky market-linked products, FD ensures safety of your money with guaranteed returns.
Let’s see which banks are offering higher rates, what benefits are available, and what points investors must check before locking their savings.
Why FD is Gaining Popularity
FD is one of the oldest and most trusted investment options in India. The main reasons for its popularity are:
- Safe capital – No direct effect of market ups and downs.
- Guaranteed returns – Interest rate remains fixed till maturity.
- Insurance cover – Deposits up to ₹5 lakh are insured by DICGC.
- Easy liquidity – FD can be broken before maturity if required (with some penalty).
- Loan facility – Banks allow loan or overdraft of up to 90-95% of FD amount.
Small Finance Banks Offering 9% Interest
While large private and public sector banks are giving 7%–7.5% interest only, small finance banks are offering up to 9%. This makes them very attractive for investors who want higher income without taking stock market risk.
Here are some of the leading small finance banks with their current FD rates (valid till June 2025):
| Bank Name | Interest Rate (General) | Interest Rate (Senior Citizen) | Tenure |
|---|---|---|---|
| Slice Small Finance Bank | 9% | 9%+ | 18 months – 36 months |
| Unity Small Finance Bank | 8.60% | 9.10% | 1001 days |
| Suryoday Small Finance Bank | 8.40% | 8.80% | 30 months – 3 years |
| Utkarsh Small Finance Bank | 8.25% | 8.75% | 2 – 3 years |
| Jana Small Finance Bank | 8.20% | 8.70% | 5 years |
What Investors Should Keep in Mind
Even though FD is safe, small finance banks are relatively new compared to bigger banks. So, investors should check these points before investing:
- Bank credibility – Check financial strength and ratings of the bank.
- DICGC cover – Only ₹5 lakh deposit is insured. If you have more, spread across multiple banks.
- Premature withdrawal – Early closure may reduce your interest earnings.
- Tax on interest – FD interest is taxable, and TDS is deducted if yearly interest is above ₹40,000 (₹50,000 for senior citizens).
- Changing rates – Banks revise FD rates often, so always check the latest update.
Who Can Invest in FD?
- Individual citizens – Any Indian above 18 years.
- Senior citizens – Extra benefit with higher rates.
- Companies, Trusts, HUFs – Eligible to invest.
How to Open an FD and Get 9% Interest
- Visit the bank website or nearest branch.
- Complete KYC process (Aadhaar, PAN, photo required).
- Select deposit amount, tenure, and scheme.
- Make payment online or offline.
- Receive FD certificate or receipt.
Why FD is Still a Good Choice
Even in 2025, FD continues to be a safe wealth protection tool. Market-linked instruments may give high or low returns depending on conditions, but FD provides certainty.
For senior citizens, FD is especially useful as it gives regular income and protects savings. Short-term investors who want quick returns without risk can also choose FD schemes of 1.5 to 3 years.
Conclusion
Fixed Deposit remains one of the most trusted saving options in India. With small finance banks offering up to 9% interest, investors now have a chance to earn much higher returns compared to traditional banks. However, before investing, always consider the ₹5 lakh DICGC insurance limit, tax rules, and financial stability of the bank. For those looking for low-risk, guaranteed income, FD in small finance banks can be a smart move in 2025.
FAQs
What is the highest FD rate in 2025?
Some small finance banks are offering up to 9% interest on selected tenures.
Is FD in small finance banks safe?
Yes, FD is generally safe. Deposits up to ₹5 lakh are insured by DICGC, but amounts above that involve risk if the bank faces issues.
Can I break my FD before maturity?
Yes, but you may face a penalty in the form of reduced interest.
Do senior citizens get extra benefits?
Yes, senior citizens get 0.25% to 0.50% higher interest rates compared to general customers.
Is FD interest tax-free?
No, FD interest is fully taxable. If annual interest crosses ₹40,000 (₹50,000 for seniors), banks deduct TDS.