As the Reserve Bank of India’s (RBI) monetary policy committee (MPC) cut repo rate by 25 basis points on Friday, it is seen as the start of interest rate cut cycle. Typically, a cut in repo rate is followed by a similar decline in interest levied on loans as well as interest rates offered on deposit rates.
So, those depositors who are looking to lock their money into fixed deposits (FDs) may consider the current rates as the highest they would see in the near future. With a cut expected in interest rates on fixed deposits in the near future, you may want to open a new FD before the revised interest rates see a dive.
“Fixed deposits are one of the most favourite investment products for retail investors because of their assured return and safety to the capital. That is why if your financial goal is 2/3 years you can now lock the required amount in a fixed deposit,” says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services.
Here we list out the highest interest rates on fixed deposits offered by the top seven banks.
FD interest rates offered by top 7 banks
HDFC Bank: HDFC Bank offers 7.4 percent interest on FD of 4 years and 7 months tenure to general citizens, and 7.9 percent to senior citizens. If you lock this money for a period between 2 years 11 months to 35 months, the interest rate is 7.35 percent and 7.85 percent for senior citizens.
ICICI Bank: This private bank offers 7.25 per cent interest on a fixed deposit of 15 months to 18 months and 7.85 percent to senior citizens.
Federal Bank: This bank offers 7.5 percent on a fixed deposit of 444 days to general citizens and 8 percent to senior citizens. These rates came into force on Jan 10, 2025.
Kotak Mahindra Bank: This private bank offers 7.4 percent on an FD of 390-391 days to general citizens and 7.9 percent to senior citizens.
SBI: It offers 7 percent on fixed deposits to general citizens for a tenure between 2-3 years and 7.5 percent to senior citizens.
(Source: Bank websites; Above rates are the highest offered on a particular time period)
Bank of Baroda: It offers 7.15 percent to general citizens and 7.65 percent to senior citizens on a fixed deposit of tenure between 2-3 years.
Union Bank of India: It offers 7.3 percent to the depositors on 456-day fixed deposits, whereas senior citizens are entitled to receive 7.8 percent interest.
“It is, meanwhile, important that you do not get tempted to lock major chuck of money in FDs. The fixed deposits are taxable and in the long run, they fail to generate inflation-hedged return,” adds Ms Zende.
So, it is recommended to take a proper call with regards to asset allocation of your financial goals.