Fixed deposits (FDs) continue to be one of the most preferred investment options for conservative investors, thanks to guaranteed returns and capital protection. With banks and non-banking financial companies (NBFCs) currently offering interest rates of up to 8.10% per annum, choosing the right type of FD can be just as important as selecting the highest interest rate.
An FD allows investors to deposit a lump sum for a fixed tenure ranging from 7 days to 10 years. The interest rate is locked in at the time of investment and can either be paid periodically or along with the principal at maturity. Since returns are fixed and not linked to market movements, FDs remain a popular choice for emergency funds, retirement savings and short-term financial goals.
Where are the highest FD rates?
Small finance banks continue to offer some of the highest FD interest rates in the market. Among mainstream private banks, a few lenders are offering rates above 7%, while public sector banks generally offer lower returns.
| Institution | Regular FD Rate | Senior Citizen Rate |
|---|---|---|
| Suryoday Small Finance Bank | 8.10% | 8.25% |
| Shivalik Small Finance Bank | 7.80% | 8.30% |
| IDFC FIRST Bank | 7.25% | 7.50% |
| YES Bank | 7.00% | 7.75% |
| RBL Bank | 7.20% | 7.70% |
| SBI | 6.45% | 7.05% |
| HDFC Bank | 6.50% | 7.00% |
| ICICI Bank | 6.50% | 7.10% |
Rates as of July 23, 2026.
DO READ: Senior citizen FD rates up to 8.50%: Small finance banks lead, private lenders offer up to 8%
Different types of fixed deposits
Banks and financial institutions offer several FD variants to suit different investment needs.
| Type of FD | Who is it suitable for? | Key Features |
|---|---|---|
| Standard FD | Most investors | Fixed interest rate for a chosen tenure |
| Tax-saving FD | Individuals and HUFs | Eligible for tax deduction up to Rs 1.5 lakh under Section 80C; 5-year lock-in |
| Senior Citizen FD | Investors aged 60 years and above | Usually offers 50 basis points higher interest than regular FDs |
| Floating Rate FD | Investors expecting interest rate changes | Returns linked to benchmark rates such as the RBI repo rate |
| Flexi FD | Those seeking liquidity | Linked to savings account; allows partial withdrawal while the remaining amount continues earning FD interest |
| Corporate FD | Investors seeking higher returns | Offered by NBFCs and HFCs; generally offers higher rates than bank FDs |
| Cumulative FD | Long-term investors | Interest is compounded and paid at maturity |
| Non-cumulative FD | Regular income seekers | Interest paid monthly, quarterly, half-yearly or annually |
| Callable FD | Investors needing flexibility | Premature withdrawal allowed, usually with a penalty |
| Non-callable FD | Investors who can stay invested till maturity | Higher interest rates but no premature withdrawal |
MUST READ: Tax-saving FDs: Top banks offering up to 8.60% interest, eligibility, tax benefits and key rules explained
What should investors consider?
While the headline interest rate is important, investors should also consider the investment tenure, liquidity needs, tax implications and the financial strength of the institution. For example, those looking to save tax may prefer a tax-saving FD despite the five-year lock-in, while retirees seeking regular income may find non-cumulative or senior citizen FDs more suitable.
Investors who may need access to funds before maturity could consider callable or flexi FDs, whereas those who can remain invested throughout the tenure may benefit from the relatively higher returns offered by non-callable FDs. Similarly, cumulative FDs are generally preferred by investors looking to maximise returns through compounding, while non-cumulative deposits are designed for those who want periodic income.
Although small finance banks and NBFCs often offer higher interest rates than large commercial banks, investors should compare products carefully and ensure they are comfortable with the institution before investing. Selecting an FD that matches your financial goal, rather than simply opting for the highest advertised rate, can help balance returns, liquidity and safety.
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