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.
Hi, could you clarify my doubt.
An Housewife would like to invest in 5L in fixed deposit to generate 10% p.a return. She would receive 50,000. Assuming, Bank will deduct TDS @ 10.3% so she would effectively earn 44,850. No additional income for her. Since the tax slab rate is 1,60,0000, would she get her 5150 deducted as TDS when she declares she has only income of interest with income tax or TDS gone is gone?
Since she is not liable to pay any tax – what you need to do is file form 15G with the bank when you open the FD so that they don’t deduct the TDS. This is a fairly simple process and if you ask them they will guide you through it.
Hi,
If i have some x amount but not sure whether i need them in next 6-8 months, but also don’t want to keep it in low interest rates saving account.
Is it good to keep them in FD (break FD if i need money) or some banks are providing penalty free FD where i can withdraw money anytime. ?
Hi Pankaj
There are few ways and you can select the most suitable one at that point of time. But please check with the bank before you put your money in FD
1. Some banks have “sweep in sweep out” facility, may be in some other name. I think this is exactly what you want. I remember Manshu made a post on this.
2. Some banks allow to withdraw money anytime after some period without penalty eg SBI for 7-180 days deposit (please check with SBI)
3. Otherwise you can take loan upto 90% (depends on bank) of your FD amount.
4. You always have the option to break your FD prematurely, with penalty.
You can make some calculation to find out the most economical option, if you have to choose between 3 & 4
If you think you may need money before FD period, it will be good idea to divide the amount in 4-5 or more smaller FDs instead of 1-2 FDs, eg get 4 FDs of 10K, 20K, 30K, 40K instead of 1 FD of 100K and encash the FD as per your requirement.
I think Umesh has laid out all reasonable options to you and the only thing I’ll add here is that even if banks don’t impose penalty on your fixed deposit – they will give you that rate of interest which is applicable for the duration you kept the money in.
So, if a bank offers 10% for 1 year and 5% for 6 months, and you make a FD for a year , but break it in 6 months, the bank will give you 5% for 6 months and not 10% for 6 months.
Hi Manshu, Nice post on interest rates. By reading entire post i came to know that only “Dhanlakshmi Bank” and “Syndicate bank” are offering high interest rate in less Tenure. These are the best banks to deposit our money.
Hi geek dude,
First of all, this blog is THE BEST answering lots of my financial question that was not addressed in any other finance websites.
And just want to point out that there is a risk in investing money in FD with less tenure. This is called as “Risk of Re-investment”. Remember, all these interest rates are calculated on ‘per annum’ basis (i.e., for 12 months). So once, your investment that matures in lower tenures (say 300 days in dhanalaxmi bank), and if you want to re-invest the principal and interest income into some other FD ot the same FD – yoo need to know that interest rate at that time will not be as competetive as now. Meaning, after 300 days of your FD, you may end up re-investing your money back to a lower FD scheme (with may be 7-8% p.a)
So if you can invest for longer tenure say 3 to 5 years, this is the best time, as you will get competetive interest rate that is going to be reduced. Else, if you want to make some quick bucks, and no plan of re-investing that money, then you can go for schemes like 300 days FDs like mentioned above.
Thanks for your great comment Jerry!
Hi Manshu,
You are doing awesome job in this blog.
Also, it would be great if I get further more information on the other interest rate schemes.
Meaning, I have come across this following link, where Kerala State Transport Corporation is accepting FD, and paying interest rate of 10.25% for one year. More options are available here:
http://www.ktdfc.com/index.php?option=com_content&view=category&layout=blog&id=11&Itemid=21
This FD is backed by Kerala State Government, so risk will be very minimal.
I am trying to collect these kind of FD schemes, but no so successful as of now.
Would you be able to post a blog on this kind of FD schemes from Government (State or Central) and other entities, it would be very useful for people like me.
Thanks,
Jerry.
Thanks Jerry, someone had left a comment about this earlier as well, but I’m not really knowledgeable enough about these things to write about it. I can try researching some info on KSRTDC specifically but then I don’t know how comprehensive it will be. I’ll give it a try. Thanks for the suggestion.
Sir, i have invested 1,05,000 and drawn interest around 9975 as FD interest, i am male tax payer in 10% bracket, whether this amount is exempted from income tax.
No. It is taxable.
No TDS deducted doesn’t mean, interest income is tax exempt.
What is the interest amount i will get monthly if i deposit Rs 150000 for 3 years as a fixed deposit.
Hi, I would like to do a FD, request you to suggest me the best bank where I can do my FD
also kindly let me know the tenure I am from bangalore. Thankyou…
The table above has got a list of some of the best rates and the tenures as well, so you can select one that suits you from the list.
Nimisha it will depend on compound interest period.if it is semi-yearly then first interest for 6months will be 5000,then it will be added to the main principal and the total of 1,05,000 will be the principal for the rest semi-year.hence the total amount at the end of one year will be 1,05,000+5,250.5,250 is the interest for the second semi-year.
Solanki Sir/Umesh Sir
With reference to your posts dtd. 5.3.12 above, I am eagerly awaiting for the necessary details, as it will help me in saving some rs 2700, that otherwise I have to pay as income tax on bank interest for the current year.
Please clear the position as even my office IT persons are unaware of any such exemption.
Thanks
Saumya
I am sorry Saumya, you can’t save tax on your interest income, and your office IT persons are right, as even a single rupee earned as bank interest is taxable and it will be included in your total income.
I, myself put a question to Jitendra Solanki (in a post above) when he said “As per IT act interest income from all sources up to Rs 10000 in a financial year is exempted from tax.” but he has no reply, perhaps he has no relevant section/sub section of the IT Act on his support.
However FYI, FM proposes that saving bank interest income upto 10K will be tax free from next year.
Now a question arises, if 10K will be tax free from next year then how it was exempted from tax in previous years, as claimed by JS.
Will it be a problem i believe if we invest our funds in Repco bank coz we declare our IT returns to save tax & wen we invest here it wld surely be a problem, coz most of the private banks dont publish all the infor @ FD….
Hi,
I have some 4 lacs piled up in my salary account of ICICI for which am getting 4% interest.
Should I switch to Yes bank for 7% interest or ICICI can revise its rates too. ??
Since ICICI hasn’t raised the rates yet and hasn’t made any noises about raising then in the future it doesn’t seem likely they will raise savings rate in the future as well. You could either make a fixed deposit or move the money, that’s up to you with what you’re comfortable with.
These interest rates are not fixed anymore, so tomorrow some other bank may look better. A good option for you is to move the money to an bank account with sweep-in facility, such an account automatically transfers amounts that exceed a certain level into a fixed deposit. If at any point you make a debit on your account, your latest flexi deposit will be broken to the extent of extra amount required.
Hi
I am an NRI who wants to put money in India now that the fixed deposits rates offered to NRI is much higher will I be entitle to a higher rate of interest as a a senior citizens gets in India as I understand Senior citizens in India are entitle to a higher rate of interest. Can anyone provide me with some information on this issue.
No, U would not be entitled to a higher rate of interest as a a senior citizens gets in India in case of any NRI deposits, & the same is available only to resident Senior citizens in India. NRIs only get the basic rate & not any extra, even though he might be a Senior citizen resident outside India.
9.5% for 5 years is better than 10% for 1 year.
Some banks have higher rate of interest for short term deposits and low rate for longer periods. How is that For eg SBI offers less interest for 5 years and more.
Also Repco bank is offering 10+ percentage of interest. There is no necesity of filing 15G and 15H forms. Only problem is there is no ATMs.
Thanks,
why the list does not showing co-operative banks intrest rates
The return you get for your FD depends on many factors like period for which you require such amount, FD tenure, choice of bank, interest rate of the bank in which you make a deposit, interest payout period, whether senior citizen or not etc. etc
Roughly, you have to make FD(s) for approx 13,00,000 so as to get 10,000 per month for an individual who is not a senior citizen (the amount is pre tax and subject to TDS). FD tenure over 1-2 years, interest rate @ 9.25 of a nationalised bank. Normally interest is paid quarterly but many banks accept for monthly payout for FD of such amount. So it is better if you contact nearby banks.
i want to know the best way of getting some monthly income by investing some amount.
how much amount of money i should invest so i could get 10000.00Rs every month??
Rena,
It solely depends on how much return you are able to make on your investment and the time horizon of your invest. Today a long term FD is fetching you 9-10% interest.So if you invest Rs 12 lakh you can expect Rs 10000 every month. But here taxability will play a major role as interest income above Rs 10000 from all sources in a financial year is taxable as per your income tax slab.Hence, the more viable option is to invest through multiple instruments with some giving you fixed returns and some variable with good growth.
“……… as interest income above Rs 10000 from all sources in a financial year is taxable as per your income tax slab”
Sorry Sir.
Who says that interest income upto Rs 10,000 in a FY is tax free!!!!!!!!
Umesh,
As per IT act interest income from all sources up to Rs 10000 in a financial year is exempted from tax.
You can visit http://www.incometaxindia.gov.in for more info on this.
@ Jitendra
I shall be thankful if you please post the complete website address or the relevant section/sub section of the IT Act, that mention this information. (as I did not get any such information in the website, to the extent I can search)
I enquired about FD with LVB, They are saying that its locked for 5 YEARS and the rate of interest is 9% only.
Sir,
I am aware Repco bank is offering 11% interest for senior citizens and no form 15 G/H need be submitted and ofcourse there will not be any TDS. But I am told that it is a GOI enterprises. I want to make sure how safe it is to deposit in Repco bank.
Dear Sir,
I Have 3.5 Million US$
can u please tell me this amount are Converted into Indian Rupee and deposited into Andhra Bank.
it is Possible are Not.
Please Tell Me its Urgent Please.
Manshu..thats a nice post.
Can u throw some light on the Monthly income plans that are in the market eg Metlife, Axis etc.
On a query regrding this with Axis, i gt the following reply for a 15K monthly premium “The policy premium payment period is for 6 years. and the guaranteed monthly income will start from the 7th year to next 10 years. You will get Rs.15000/- for the first 5years(ie 7th years to 12th year) and Rs.21150/-will be added to your monthly income for the remaining 5years. This is to considering the rate of inflation. On completion of the monthly guaranteed income, you will get refund of your first year and 50 % of the second year premium.Your annual premium will be Rs.322,426/”
I dont understand the math behind this, is it a good scheme to invest.? Can u pls advice?
Jokula,
Monthly income plans by life insurance are costly affairs.They are primarily endowment plans where the investment of your premium is inclined towards debt. As such the returns are not very high.Also considering the high commission and other expenses the contribution you have to make to fetch a good monthly income is very high and most of the time beyond your means.
I will recommend you to avoid such schemes and invest through other cost effective instruments.
Can you also list companies that offer fixed deposits. Also suggest whether is it safe to invest in these companies. Some I found are: Jaypee Group that gives 11.75% / 12.25% / 12.5% for 1 /2 /3 years respectively on a minimum deposit of 20000. Sriram Transport Finance Company Ltd. that gives 9.25% / 9.75% / 10.75% for 1 / 2 / 3-5 years respectively on a minimum deposit of 25000. United Spirits that gives 11% / 11.5% for 1 /2 years respectively on a minimum deposit of 25000.
I”ll try to collate that info – I’ll have to see were I can find that info such that it can be updated regularly. Let’s see.