FD rates in July 2025: These 12 banks still offer up to 8.5% returns

Business Standard

a day ago

Fixed deposit (FD) interest rates are on the decline once again, with State Bank of India (SBI), HDFC Bank, ICICI Bank, Indian Bank, Bank of Baroda and Canara Bank among those reducing rates by 10 to 25 basis points since June 2025.
SBI's latest cut, effective July 15, 2025, lowers FD rates by 15 basis points for both general and senior citizens on tenures between 46 days and less than one year. These moves follow the Reserve Bank of India's decision to slash its benchmark repo rate by a total of 50 basis points over three consecutive cuts.
Some banks still offer over 8 per cent on select tenures
Despite the broader dip, a few banks continue to offer higher FD rates, particularly for risk-averse investors willing to park funds for specific durations.
As of July 16, 2025, slice Small Finance Bank offers 8.50 per cent for a tenure of 18 months, Suryoday Small Finance Bank gives 8.40 per cent for FDs above five years and Bandhan Bank provides 7.40 per cent among private sector players.
These rates apply to deposits below Rs 3 crore and may vary slightly by branch or mode of investment.
Take a look at the banks offering the highest interest rate as of July 16, according to PaisaBazaar:
Small Finance Banks
Equitas Small Finance Bank
Highest rate: 7.60 per cent for 888 days
1-year: 7.25 per cent, 3-year: 7.25 per cent, 5-year: 7 per cent
ESAF Small Finance Bank
Highest rate: 7.60 per cent for 444 days
1-year: 4.75 per cent, 3-year: 6 per cent, 5-year: 5.75 per cent
Jana Small Finance Bank
Highest rate: 8.20 per cent for 5 years
1-year: 7.50 per cent, 3-year: 7.75 per cent, 5-year: 8.20 per cent
slice Small Finance Bank
1-year: 6.75 per cent, 3-year: 8.25 per cent, 5-year: 7.75 per cent
Suryoday Small Finance Bank
Highest rate: 8.40 per cent for 5 years
1-year: 7.50 per cent, 3-year: 8.15 per cent, 5-year: 8.40 per cent
Ujjivan Small Finance Bank
Highest rate: 7.75 per cent for 2 years
1-year: 7.65 per cent, 3-year: 7.20 per cent, 5-year: 7.20 per cent
Unity Small Finance Bank
Highest rate: 7.75 per cent for 1001 days
1-year: 6.50 per cent, 3-year: 7.25 per cent, 5-year: 7.25 per cent
Utkarsh Small Finance Bank
Highest rate: 8 per cent for 2 to 3 years
1-year: 6.25 per cent, 3-year: 8 per cent, 5-year: 7.50 per cent
Private Sector Banks
Bandhan Bank
Highest rate: 7.40 per cent for 2 years to less than 3 years
1-year: 7.25 per cent, 3-year: 7.25 per cent, 5-year: 5.85 per cent
CSB Bank
Highest rate: 7.40 per cent for 13 months
1-year: 5 per cent, 3-year: 5.75 per cent, 5-year: 5.75 per cent
DCB Bank
Highest rate: 7.40 per cent for 25 to 26 months
1-year: 7 per cent, 3-year: 7 per cent, 5-year: 7 per cent
Indian Bank
Highest rate: 6.90 per cent for 444 days
1-year: 6.10 per cent, 3-year: 6.25 per cent, 5-year: 6 per cent
TDS and tax treatment of FD interest
Interest earned from fixed deposits is fully taxable and subject to tax deduction at source (TDS) once it crosses a certain threshold.
'Interest earned on FDs is taxable, with tax deducted at source (TDS) if it exceeds a specified limit,' said Adhil Shetty, CEO of BankBazaar.
The 2025 Union Budget increased the TDS exemption limits:
From Rs 40,000 to Rs 50,000 for general depositors
From Rs 50,000 to Rs 1 lakh for senior citizens
"Take the example of Shikha, a 35-year-old Ghaziabad resident earning Rs 75,000 annually in FD interest. Since the threshold for general citizens is now Rs 50,000, the remaining Rs 25,000 attracts TDS at 10 per cent. That means Rs 2,500 will be deducted upfront by the bank," Shetty explained.
This amount is also added to her total taxable income. However, if her overall income is below Rs 2.5 lakh, she won't owe any additional tax. In such cases, she can avoid TDS by submitting Form 15G at the beginning of the financial year. Senior citizens in a similar situation can submit Form 15H instead.