FD rate up to 8.5% for senior citizens investing for three years; Know the list of banks

Economic Times

18 hours ago

Several small finance banks are offering attractive fixed deposit interest rates up to 8.5% for senior citizens on three-year terms, with deposits insured up to Rs 5 lakh. While these rates are appealing, experts advise caution and limiting exposure to the insured amount. Read below to know more about bank FD interest rate.
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Bank FD interest rate for senior citizens
FD rate up to 8.5%
FD rate up to 8.25% for senior citizens
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Bank name
Interest rate
Utkarsh Small Finance Bank
8.5%
Jana Small Finance Bank
8.25%
slice Small Finance Bank
8.25%
Suryoday Small Finance Bank
8.15%
FD rate up to 8.15%
When is TDS deducted from bank FDs?
There are still some banks which continue to offer up to 8.5% interest rate on fixed deposits (FDs) made by senior citizens (age 60 years and above) for a three- year term with a maximum limit of Rs 3 crore.Read below to know the list of banks offering FD interest rates up to 8.5%. Utkarsh Small Finance Bank is offering 8.5% interest rate on FD of three year tenure. Jana Small Finance Bank is offering 8.25% interest rate on FD for three year tenure for senior citizens.slice Small Finance Bank is offering 8.25% interest rate on FD for three year tenure for senior citizens.Source: Paisabazaar.com as of July 16, 2025 Suryoday Small Finance Bank is offering up to 8.15% interest rate on FD for three year tenure.Disclaimer: While deposits in small finance banks are insured by the Deposit Insurance Credit Guarantee Corporation (DICGC) up to Rs 5 lakh, experts advise investors to exercise caution when investing in their FDs. Given their unique business model, the risk associated with investing in small finance bank FDs might differ slightly from that of scheduled commercial banks. To mitigate potential risks, it's recommended that investors limit their exposure to small finance bank FDs to an amount that falls within the DICGC coverage. This ensures that their principal and interest are protected in unforeseen circumstances.Banks are required to deduct tax deducted at source (TDS) if the interest earned on a fixed deposit (FD) exceeds Rs 1 lakh in a particular bank. Keep in mind that TDS isn't an extra tax; you can reclaim it as a refund or offset it against your total tax liability when you file your income tax return (ITR). Moreover, if you are eligible for a tax refund, you might also qualify for interest on that refund.For instance, if a senior citizen has an income is Rs 11 lakh, they won't have to pay income tax thanks to the Section 87A tax rebate under the new tax regime for FY 2025-26. The Section 87A tax rebate is applies to income up to Rs 12 lakh under the new tax regime.Additionally, a senior citizen can submit Form 15H to avoid TDS deduction if his total income, after claiming all deductions and the Section 87A rebate is below the taxable limit, which is Rs 12 lakh for the new tax regime or Rs 5 lakh for the old one.Even though no income tax is charged on income below Rs 12 lakh, banks and other financial institutions will still deduct TDS. This is because the law requires them to deduct TDS once the interest/income amount surpasses a certain limit, which is Rs 1 lakh for senior citizens. Banks are not aware of individual tax liabilities and will deduct TDS whenever the annual interest exceeds Rs 1 lakh. Hence submit Form 15H to let the banks know.