Top 5 bank FD rates

Many people prefer FDs as they are considered safer as compared to equities. Here are certain things that you must know while opening an FD account.

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A fixed deposit is also known as term deposit because it is for a fixed pre-determined time period or term.
Fixed deposit (FD) is one of the most popular investment avenues. Many people prefer bank FDs over equities as the former are considered safe. The return earned from a bank FD is fixed and known at the time of investing unlike in case of equity.

Fixed deposit schemes are also known as term deposit schemes. This is because money is deposited with a bank for a fixed pre-determined time period or term. Here are certain things that you must know while opening an FD account.

  • Opening an FD account
One can open a term deposit account with a bank where one already has a savings account. Some banks may allow you to open an FD account without having to open a savings bank account. However, you will be required to undergo know-your-customer (KYC) process in case the bank allows you to place a FD without a savings account.

You will be asked to provide self-attested photocopies of ID proof such as PAN, address proof such as Aadhaar, Voter ID card, passport etc. and coloured passport size photographs. You will be required to show the original documents which will be returned immediately post-verification.

  • Minimum and maximum investment amount
The minimum amount needed to open a fixed deposit account varies from bank to bank. However, there is no limit on the maximum amount which one can invest in an FD.

  • Tenure of FD
The minimum and maximum tenure offered for which an FD can be placed varies from one bank to another. Usually, one can invest in FD for minimum period of 7 days and for a maximum of 10 years. You can choose the period for which you wish to keep your FD as per your requirement.

Top 5 bank fixed deposit interest rates
Tenure: 1 year

Bank Name Interest rate (%) compounded qtrly What Rs 10,000 will grow into
Ujjivan Small Finance Bank 8.00 10824.32
Lakshmi Vilas Bank 7.50 10771.36
IDFC First Bank 7.25 10744.95
RBL Bank 7.20 10739.67
AU Small Finance Bank 7.00 10718.59

Tenure: 2 years
Bank Name Interest rate (%) compounded qtrly What Rs 10,000 will grow into
Ujjivan Small Finance Bank 8.00 11716.59
Lakshmi Vilas Bank 7.50 11602.22
AU Small Finance Bank 7.50 11602.22
DCB Bank 7.30 11556.74
IDFC First Bank 7.25 11545.40

Tenure: 3 years
Bank Name Interest rate (%) compounded qtrly What Rs 10,000 will grow into
AU Small Finance Bank 7.77 12596.89
DCB Bank 7.60 12534.01
Lakshmi Vilas Bank 7.50 12497.16
Ujjivan Small Finance Bank 7.50 12497.16
IDFC First Bank 7.25 12405.47

Tenure: 5 years
Bank Name Interest rate (%) compounded qtrly What Rs 10,000 will grow into
DCB Bank 7.50 14499.48
AU Small Finance Bank 7.50 14499.48
Lakshmi Vilas Bank 7.25 14322.61
IDFC First Bank 7.25 14322.61
RBL Bank 7.15 14252.43
All data sourced from Economic Times Intelligence Group (ETIG)
Data as on March 26, 2020


  • Interest payments
The interest rate offered on the fixed deposits (FD) will depend on the period for which you are investing in the FD and also vary from bank to bank for FDs for the same tenure. Senior citizens are typically offered higher interest rates. To receive the interest payment, you can choose either cumulative option or non-cumulative option.

Under the cumulative option, interest accrued on the deposit is re-invested and paid at the time of maturity along with principal amount.

In the non-cumulative option, interest is credited into the depositors account at the pay-out interval chosen at the time of placing the FD. Generally, one can choose from the options of receiving the interest on monthly, quarterly, half-yearly or annually basis as offered by the bank.

  • Taxation
Interest received on FD is fully taxable in the hands of the investor. It will be taxed at the rates applicable to your income tax slabs. TDS will be deducted by the bank if the interest payment in a single financial year exceeds Rs 10,000, as per current tax laws. To avoid TDS, one can submit Form 15G or Form 15H (as applicable) to the bank.

  • Premature withdrawals
In case of any urgent requirements, one can break his/her FD before the maturity date. A penalty may be levied by the bank on premature withdrawals. The penalty amount varies from one bank to another.

While placing a FD, one must check the rules regarding pre-mature withdrawals. Sometimes, banks offer FDs without premature withdrawal facility as well as FDs without penalty on premature withdrawal.

  • Loan facility
One can use FD as a collateral to obtain a loan. The maximum loan sanctioned is usually a certain percentage of the principal deposit. This percentage may vary bank to bank.

  • Nomination facility
Nomination facility for FDs is also available.

  • Automatic renewals
At maturity, if no specific instructions are given, most banks automatically renew the FD for the same period for which it was initially placed at the interest rates prevailing on the date the FD matures. If you do not want automatic renewal of your FD, you need to choose this option on the account opening form.

If you have forgotten to mention it, then you can visit the bank branch on the day of maturity and ask them to credit the proceeds into your savings account.

  • Placing via Net-banking
Nowadays, banks offer the facility of opening a FD account online via net-banking through your account. One can invest in FD without having to visit a branch physically. However, remember that your bank may not issue you a printed FD receipt/advice if invested online.

Disclaimer: The data/information given above is subject to change therefore before taking any decision based on it, contact the bank/institution concerned. For any queries or changes, please write to us on or call us at 022 - 66353963.
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