Banks Interest To Senior Citizens: Fixed deposits remain a popular choice for senior citizens who want regular and more predictable returns. Some small finance banks are offering higher interest rates than many large banks. As of September 9, 2026, rates for five-year FDs for senior citizens go as high as 8.5%. Suryoday Small Finance Bank is at the top of the list with an 8.5% rate. Jana Small Finance Bank is next with 8%. The rates in the table are for deposits of up to Rs 3 crore.
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Banks offering competitive FD rates for senior citizens
| Bank Name | Interest rate |
|---|---|
| Suryoday Small Finance Bank | 8.50% |
| Jana Small Finance Bank | 8.00% |
| Ujjivan Small Finance Bank | 7.70% |
| Equitas Small Finance Bank | 7.50% |
| Utkarsh Small Finance Bank | 7.50% |
| AU Small Finance Bank | 7.25% |
| slice Small Finance Bank | 7.25% |
| Shivalik Small Finance Bank | 6.50% |
| ESAF Small Finance Bank | 6.25% |
Suryoday’s current website also shows FD rates of up to 8.5% a year.
Small finance bank FD safety and deposit insurance
A high interest rate can look tempting, but senior citizens should also look at the safety side before putting money into an FD.
Small finance bank deposits are covered by DICGC insurance when the bank is an insured bank. The cover is up to Rs 5 lakh for each depositor at one bank. This Rs 5 lakh includes both the principal and interest. Deposits held in different branches of the same bank are added together for this limit.
- DICGC cover is limited to Rs 5 lakh for the same depositor and same ownership capacity at one bank.
- Having several FDs at the same bank doesn’t increase the insurance limit.
- Deposits at different banks can have separate insurance coverage.
When Banks Deduct TDS on FD Interest?
Tax deducted at source (TDS) can also affect FD returns. For senior citizens, the TDS threshold on interest from bank or co-operative bank deposits is Rs 1 lakh in a financial year. The higher threshold was introduced from April 1, 2025.
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TDS isn’t a separate extra tax. It is tax collected in advance and can be adjusted against the final tax payable. Any eligible excess can be claimed back through the income tax return.
A resident senior citizen aged 60 years or above can submit Form 15H to the bank when the required conditions are met and they expect their final tax liability to be zero. The Income Tax Department confirms that Form 15H is meant for resident individuals aged 60 or more who want interest income paid without TDS.
Senior citizens can also get a deduction of up to Rs 50,000 on eligible interest income under Section 80TTB, subject to the applicable tax rules.
