Good news for senior citizens! Up to 8.05% interest is available on 5-year FDs
Some small finance banks are offering senior citizens interest rates of up to 8.05% on 5-year FDs. Experts advise focusing on safety along with higher returns. Eligible investors can submit Form 15H to avoid TDS.
Despite rising inflation and market fluctuations, fixed deposits (FDs) remain the most reliable investment option for senior citizens. Significantly, some small finance banks are offering interest rates of up to 8.05% on 5-year FDs for senior investors. These rates apply to those aged 60 and above.
" "This bank is giving the highest interest
Suryoday Small Finance Bank is currently offering the highest interest rate of 8.05% for senior citizens on 5-year FDs. Jana Small Finance Bank is offering 7.77% and Ujjivan Small Finance Bank is offering up to 7.70%.
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Additionally, Equitas Small Finance Bank and Utkarsh Small Finance Bank are offering returns up to 7.50%. Small finance banks are offering higher interest rates than larger banks to attract customers.
Why are small banks giving higher returns?
According to Saurabh Jain, co-founder of Stable Money, small finance banks are offering attractive interest rates to increase retail deposits.
He added that banks like Utkarsh, Suryoday, and Shivalik have maintained stability in their FD rates for a long time, which has increased investor confidence.
Caution is necessary before investing
Experts say that investing solely on the basis of high interest rates is not a good idea. It's also important to consider security when investing in small finance banks.
However, all bank FDs offer insurance coverage of up to ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Therefore, it is advised to keep FD investments in small finance banks within the limit of Rs 5 lakh, so that the money remains safe in case of any untoward incident.
Also know the rules of TDS on FD
If the annual interest earned on an FD exceeds ₹1 lakh, the bank deducts TDS.
However, under the new tax regime for FY 2025-26, income up to ₹12 lakh will be exempt from tax. In such circumstances, senior citizens can avoid TDS by submitting Form 15H.