Senior citizens can currently secure fixed deposit interest rates of up to 8.50%, with small finance banks offering some of the most attractive returns in the market. According to reports from Mint, private, public sector and foreign banks are also providing competitive FD rates for elderly depositors. For those investing substantial sums, even a marginal variation in FD rates can have a significant impact on the total interest earned, making it crucial to compare rates across different banks and select appropriate deposit tenures.
Small finance banks are offering the most competitive rates for senior citizens, with Suryoday Small Finance Bank leading at 8.50% for 5-year tenure. As reported by Mint, Equitas Small Finance Bank offers 8.50% for 5-year deposits, while ESAF Small Finance Bank provides 8.50% and Shivalik Small Finance Bank offers 8.50%. Other notable performers include Jana Small Finance Bank at 8.30%, Ujjivan Small Finance Bank at 8.30%, and Utkarsh Small Finance Bank at 8.25%. These rates are applicable to deposits of less than ₹3 crore and were last updated on 26 August 2026.
Private sector banks are offering competitive rates with DCB Bank leading at 8.00% for 5-year tenure. According to Mint, SBM Bank India follows closely at 8.15%, while Bandhan Bank offers 7.95% and IndusInd Bank provides 7.75% for senior citizens. Other notable performers include YES Bank at 7.75%, RBL Bank at 7.70%, Tamilnad Mercantile Bank at 7.70%, and Jammu & Kashmir Bank at 7.55%. These rates are also applicable to deposits below ₹3 crore and were updated as of 26 August 2026.
Public sector banks are offering more moderate rates compared to private and small finance banks. As reported by Mint, Bank of India leads at 7.45% for 5-year tenure, while Bank of Baroda offers 7.25% and Central Bank of India provides 7.25%. Other notable performers include Bank of Maharashtra at 7.15%, Indian Bank at 7.15%, Indian Overseas Bank at 7.10%, Canara Bank at 7.10%, and Standard Chartered Bank at 7.10%. These rates are also applicable to deposits below ₹3 crore and were updated as of 26 August 2026.
State Bank of India offers enhanced benefits for senior citizens through specialized schemes. Under the SBI WeCare scheme, eligible senior citizens can receive an additional premium over the standard senior citizen rate, taking the applicable rate to 7.05% p.a. for eligible 5-year to 10-year deposits. Super senior citizens aged 80 years and above may be eligible for an additional 10 basis points under the SBI Patrons scheme on eligible deposits. For standard retail domestic term deposits below ₹3 crore, SBI offers rates ranging from 3.05% to 6.40% p.a. for the general public, while senior citizens can receive rates up to 6.90% p.a. for the same tenures.
Under the Income-tax Act, 2025, applicable from 1 April 2026, FD interest remains taxable under Section 92 as 'Income from other sources'. According to Mint, senior citizens can claim a deduction of up to ₹50,000 on eligible deposit interest under Section 153, subject to applicable terms and conditions. The TDS provisions under Section 393 explain that banks deduct TDS at 10% once the applicable threshold is crossed, with the threshold set at ₹1 lakh for senior citizens. However, banks are required to deduct TDS even when no income tax is payable, as the law mandates deduction once interest exceeds ₹1 lakh. To avoid TDS, senior citizens can submit Form 15H (now renumbered as unified Form 121) if their total income after claiming all deductions and Section 87A rebate is below the taxable limit of ₹12 lakh under the new tax regime.
