Updated: May 24 2013
After I did the post on Indus Ind Bank offering 9.5% for 400 days, I received emails from readers Suresh Jain, and Vijay Dongre to tell me about a couple of other banks that are also offering good rates, so I thought I should do a small post to inform other readers about these banks that are offering high interest rates on fixed deposits.
I’ve also added to the information emailed to me by compiling a list of bank fixed deposits that are offering more than 9% right now.
Although I’m sure I would’ve missed some banks, I think this list constitutes some of the best fixed deposit rates that are currently being offered by Indian banks. If you know of any banks outside this list then please leave a comment, and I’ll update the post with your suggestions.
Some of you have asked about banks because they are safe, but there are plenty of other safe places to invest your money in India too, and you can opt for one of those instead of a bank. (Read: List of 10 Safe Investments in India)
| S.No. | Bank | Tenure | Interest Rate |
|---|---|---|---|
| 1 | Tamil Nadu Mercantile Bank | 20 month 20 days | 9.50% |
| 2 | Lakshmi Vilas Bank | 1 year | 9.50% |
| 3 | Karur Vysya Bank | 2 years to 3 years | 9.50% |
| 4 | City Union Bank | 2 – 5 years | 9.25% |
| 5 | Yes Bank | 15 months | 9.25% |
| 6 | Punjab and Sind Bank | 500 days | 9.25% |
| 7 | Central Bank of India | 555 days | 9.25% |
| 8 | Dena Bank | 750 days | 9.25% |
| 9 | Allahabad Bank | 1 year to less than 2 years | 9.15% |
| 10 | South Indian Bank | 1 – 3 years | 9.00% |
| 11 | Bank of India | 1 year to 8 years | 9.00% |
| 12 | Oriental Bank of Commerce | 1 years to 10 years | 9.00% |
| 13 | Canara Bank | 1 year to 2 years | 9.00% |
| 14 | State Bank of Patiala | Â 555 days | 9.00% |
| 15 | Indian Bank | 9 months to less than 3 years | 9.00% |
| 16 | Kotak Bank | 700 days | 9.00% |
| 17 | Andhra Bank | Â 1 year to 10 years | 9.00% |
| 18 | Corporation Bank | 1 year to 5 years | 9.00% |
| 19 | IDBI Bank | 500 days to 5 years | 9.00% |
| 20 | Indian Overseas Bank | 1Â – 5 years | 9.00% |
| 21 | ICICI Bank | 390 days to 2 years | 9.00% |
| 22 | Syndicate Bank | 1 year | 9.00% |
| 23 | Axis Bank | 15 months to less than 5 years | 8.75% |
| 24 | Dhanalaxmi Bank | 200 days | 8.75% |
| 25 | State Bank of Travancore | 1 year to 1000 days | 8.75% |
| 26 | Bank of Baroda | 1 year | 8.60% |
| 27 | J&K Bank | 1 year – 10 years | 8.50% |
| 28 | Vijaya Bank | 1 year to less than 3 years | % |
| 29 | Karnataka Bank | 1 year to 3 years | % |
| 30 | Federal Bank | 1 – 3 years | % |
As you can see these are some great rates, and the good news is that the tax saving fixed deposits have also got some great rates these days. If you haven’t done your tax saving investments yet then you can take advantage of those rates.
Fixed deposits aren’t the only thing that help you save tax – there are plenty of other instruments that help save tax and you can visit this page to understand the nuances of Section 80C tax saving investments in an easy to understand graphic.
Update: There was an error in the post where I said HDFC is offering 9.50%, but a couple of readers emailed me to let me know that the higher rate was for senior citizens only. I have corrected that, and apologize for the error. Thank you to Anil Kumar Kapila, and Rakesh Jain for their emails. Also, the list of senior citizen’s bank interest deposits didn’t include quite a few names in the above table which I have done now. Update 2: Added ICICI Bank’s 990 days interest rate for senior citizens. Update 3: Added Indian Bank on the comment of P.T Palani Update 4: Removed the list of senior citizens interest rates from this post because I’m finding it hard to keep the list current.
i have 5000 rupees fixed deposit to save the bank how to doposit
Go to the bank where you have a savings account, and they will help you set it up. It’s very simple but you will have to go there to get it done.
I understand Reserve Bank of India has relaxed rules for NRI of NRE deposits in Indian Rupees if the amount exceeds 1 Cores one can enjoy interested rate as high as 9% and above. How do I check which bank is offering a higher rate of interest on Fixed deposits is there website that has this latest information. What other secure investments can I look for which will give me a higher rate of interest. Thanks you for your assistance.
You can find that list here:
http://www.onemint.com/2012/01/06/best-bank-nre-interest-rates/
allahabad bank , FD interest rate is 9.50% bet 1 – <2 yrs
Thanks Ritesh – added that in the list.
i come to know that REPCO bank is offering 10.6% for general and 11% for a period of 22 months.
Please also mention a column of interest rates of senior citizens ………………………Rakesh Mishra
I’ll create a new article for that – thanks for the comment.
Please forgive my ignorance of the Indian banking system, but those interest rates seem incredibly high considering that it is difficult to find a US or European bank paying more than 1% annual interest on fixed deposits. Yet you seem to be reporting quite a few Indian banks paying as much as 10% per annum. Why don’t american and european citizens make deposits to these Indian banks and earn 10X more than they are currently earning from their current banks? Are there laws in India to prevent that? Do Indian banks have “deposit insurance” that protects all depositors, citizens or otherwise, from loss up to a certain limit? Where can I learn more? TIA.
Hi Jeff – yes, you guessed correctly, there are rules to prevent foreigners from depositing money in Indian banks. Deposits up to 100,000 are insured and the government guarantees them, but in general – it is very rare to find any Indian banks failing. Not that it never happens, but in general they are rare.
Hi Manshu,
It’s too bad for us then, but congratulations to you guys! We would love to earn a decent return on our savings over here. It seems that saving for our future is no longer rewarded.
One other factor regarding foreign investment that occurred to me after my post: currency exchange rate risk. I believe that the value of the rupee has dropped almost 20% against the US dollar in the past 6 months. So someone who converts dollars to rupees to purchase an FD would have to hope that, when it is time to redeem their investment and convert back to dollars, the exchange rate will have remained the same or better.
Hi Jeff,
I should have probably mentioned this in my earlier comment – the inflation in India is very very high compared with western countries, and even though the nominal interest rates are 9% or above, the inflation rate has also been lingering at about the same level from a couple of years so even though the 9% or 10% sounds high, the real rate of interest is much lower.
And you’re right about the exchange rate, if someone converts $ to INR, then they’re hoping INR doesn’t depreciate more than the interest rate in the future because that will defeat the whole purpose.
Hi,
I want to ask if i want to deposit some lakhs in FD , can i do it in parts, like 1 lakh in 1 month, another 1 lakh after 2-3 months. And Secondly if i withdraw amount in parts from FD before maturuty did i need to pay some penalty or still i can enjoy the same rate that was comitted initially by banks??
Is there any bank providing this flexible RD ?
–Pankaj
Hi Pankaj,
You can always do multiple FDs in the way you are mentioning. You will get the rates present at that time, but that’s the only way. If you break the FD before maturity then the bank will pay you interest for the time you kept the FD with them.
So, if the FD was for 3 years at 9.5% but you broke it in 6 months and the six month interest rate is 6% they will give you 6% for six months. Some banks also charge a penalty by reducing the interest rate by a percentage or two and that will also reduce your interest rate.
If banks didn’t do this then everyone would just make the FD at the tenure which gives the highest interest rate and then break it when they want.
Hi Manshu,
Thanks for the information. One more thing i want to ask that nowadays some banks is giving option of opening a Saving Max account with minimum amount of 25K and when the amount => 1,250000 the amount 1L is turned to FD with 9.25% and giving facility to deposit and withdraw amount without any additional cost in FD. Is it good to invest in that plan or rather go for simple FD.
Thanks
Pankaj
Hi Pankaj,
You mean the auto sweep account, right?
I did a post on that some time ago and a few people commented on some hassles and restrictions on this so you may be surprised by some bank terms when you actually go to use the facility.
And on top of that there is really no benefit of doing such a thing. If you know that you won’t need the money in future, then just do a FD and take full advantage of their best rates. For most banks the best rate are on odd days of 390 days or 690 days or something like that and the auto FD will not get you that rate.
i come to know that REPCO bank, a govt. of india enterprise, is offering 10.6% for general and 11% for senior citizen for a period of 22 months. Same may be confirmed from http://www.repcobank.com/
Dear Manshu,
Bank is saying that Form-15G should be signed only by the first holder. According to the bank, Second holder cannot sign this form even in case of deposits with ‘either or survivor’ as operating instructions. Is this correct ?
If yes, is there any way to avoid TDS for a fixed deposit for which the first holder has expired ?
If there is no way to avoid TDS, how to get refund of the TDS for a deceased person ?
Thanks
I don’t know the answer to any of these questions I’m afraid.
Dear Manshu,
Can you please tell me from where can I get answer to these questions ? I would prefer to get the answers on the internet if possible.
Thanks
Since these are tax related questions, I think a forum like the CA Club forum might help because they deal with tax all the time.
http://www.caclubindia.com/forum/default.asp
The first holder is the beneficiary & liable to tax, irrespective whether the deposit is held in single/joint name with the clause as E or S.
In case form 15G is required to be submitted, details of the first depositor is to be mentioned & signed by him/her.
In case the first depositor has deceased, necessary changes is required to be made to the original deposit receipt by deleting the name of the first holder, & then the deposit becomes held by a single individual. Then that sole holder becomes liable to tax, & can submit the requisite 15G, if required.
How about the case of nomination…in case of deceased ..will the nominee get the entire amount tax free or he has to give tax on that ?
In case of deceased, the nominee gets the entire amount, & TDS would be deducted in case the interest amount exceeds Rs.10000/- & form 15G is not submitted.
He has to pay tax according to the slab in which he is liable to tax while filing his return of income, as it will be considered as part of his/her income liable to tax.
Thanks,
Opening FD in name of parents > 60 seems to be good option with form 15H , look like RBI is going to cut rate cut soon…
i want to invest few lacks , so that i get good return amount by doing that .
can you help me out for the best option?
One newbie question…if tomorrow RBI cuts rate and FD rates fall..will the old FDs done @ higher rates get effected or not ?
Old FDs will continue to get the rates they promised you.
Thanks Manshu,
How about Tax angle for senior citizen, I believe 15H can avoid TDS but what about cases like..huge sum for longer time.. that too will tax free ?
For example 10 L for 10 year in SBI for 9.75 will yield ~26 L …is the entire amount tax free ?
You need to take the interest earned every year and show that as part of income even if you are reinvesting it. If that crosses the exemption limit then yeah you need to pay tax on it – if not then you don’t.
i want to open a fd. but i am confused it is better then any long time investment in any bank. and how many year money will be double by deposit.
you have published list of fixed deposit rate of bank
but actually, dena bank 1 yr rate 9.60
syndicate bank 364 days fd rate differe
Thanks for pointing that out Pradip – I will take a look at all these rates again – must be time to update this post.
state bank of travancore is not giving 10% interest rate on fixed deposit of 500 days. It had been decremented to 9.5% w.e.f 01\12\2011.
IDBI Bank offers the highest interest for TAX Saving Deposits @9.5% p.a.. TAX Saving Deposits are generally locked in for 5 years. It also gives a free Cheque book account and a free ATM cum Debit Card.
I am sure this would be usefull to people looking to invest in TAX Saving Deposits.
Hardik
SBI is offering 9.25 % Fixed deposit for 1yr
Thanks Sreenivas – I’ll update this post shortly.
I want to invest for double money scheme & have benefit of Tax also which bank or other scheme is preferable
Presently Oriental bank of Commerce is also offering 9.75% for a deposit for 1 year to less than 2 year
Axis bank has launched Guaranted Monthly Income Plan?
How it is?
I have never looked at it – let me see what that’s all about and I’ll write about it. Thanks for the idea Bhavin and thanks for leaving a comment.
Axis bank has launched Guaranted Monthly Income Plan?
How it is ?
i want to know the best way of getting some income by investing some amount.