highest FD interest rates: Banks offering highest FD interest rates


One of the most popular investment options is the fixed deposit (FD). Many investors prefer bank FDs to equities because the latter are thought to be safer. Fixed deposits are also known as term deposits. This is due to the fact that money is placed with a bank for a specific time period or term. There are a few things you should know before creating a savings account.

Here are banks offering the best rates on 1, 2 3, 5 years tenor for regular citizens.

Best FD interest rates with 1-year tenure

Bank Name 1 Year Qly Compound Return
RBL Bank 6.25 10639.80
DCB Bank 6.00 10613.64
IDFC First Bank 6.00 10613.64
Indusind Bank 6.00 10613.64
Bandhan Bank 5.75 10587.52

Best FD interest rates with 2-year tenure

Bank Name 2 Year Qly Compound Return
DCB Bank 6.50 11376.39
Indusind Bank 6.50 11376.39
RBL Bank 6.50 11376.39
Bandhan Bank 6.25 11320.54
IDFC First Bank 6.00 11264.93

Best FD interest rates with 3-year tenure

Bank Name 3 Year Qly Compound Return
DCB Bank 6.50 12134.08
Indusind Bank 6.50 12134.08
RBL Bank 6.30 12062.63
Bandhan Bank 6.25 12044.83
IDFC First Bank 6.00 11956.18

Best FD interest rates with 5-year tenure

Bank Name 5 Year Qly Compound Return
DCB Bank 6.60 13872.27
Indusind Bank 6.50 13804.20
RBL Bank 6.30 13669.00
IDFC First Bank 6.25 13635.39
Kotak Mahindra Bank 5.90 13402.36

Source: Compiled by ETIG, interest rates as on June 16, 2022

Opening a deposit account

A term deposit account can be opened at a bank where you already have a savings account. You may be able to start an FD account without first opening a savings account with some banks. If the bank lets you to open an FD without a savings account, you will be required to go through a know-your-customer (KYC) process.

Interest payment

The interest rate on fixed deposits (FDs) varies depending on the term for which you are investing, as well as from bank to bank for FDs of the same term. Interest rates are often higher for senior citizens. You have the choice of receiving interest payments in a cumulative or non-cumulative mode.

The cumulative option reinvests interest earned on the deposit and pays it out along with the principle at maturity.

Interest is credited to the depositor’s account at the pay-out period set when the FD is opened in the non-cumulative option. In general, one can choose to receive interest on a monthly, quarterly, half-yearly, or annual basis, depending on the bank’s options.


In the hands of the investor, interest earned on an FD is fully taxable. It will be taxed at the rates that apply to your tax brackets. According to current tax laws, if the interest payment in a single financial year exceeds Rs 10,000, TDS would be deducted by the bank. To avoid TDS, fill out Form 15G or Form 15H (whichever is relevant) and send it to the bank.
Premature withdrawal
If a person has an urgent need, he or she can break his or her FD before it matures. Premature withdrawals may incur a penalty from the bank. The amount of the penalty varies from one bank to another.

When you book an FD, make sure to read the rules of early withdrawals. Banks occasionally provide FDs with no penalty for early withdrawal as well as FDs with a penalty for early withdrawal.

Availability of a loan

A loan can be obtained using FD as collateral. Typically, the maximum loan sanctioned is a percentage of the principal deposit. This percentage may differ from one bank to other.

Auto renewal

If no particular instructions are given at the time of maturity, most banks will automatically renew the FD for the same period for which it was originally placed, at the interest rates in effect at the time the FD matures. You must select this option on the account opening form if you do not want your FD to be automatically renewed.

If you neglected to mention it, you can go to the bank branch on the day of maturity and request that the money be credited to your account.

FAQs as per HDFC Bank
1. When does the Bank issue a TDS Certificate?
The TDS Certificate, Form 16A, for TDS deducted during a calendar quarter, will be issued in the next month of the respective quarter.

2. What are the implications of booking an FD without PAN?
In the absence of PAN, following are the implications for customers:

  • TDS will be recovered at 20%(as against 10%)
  • NO TDS credit from the Income Tax department
  • NO TDS certificate will be issued (As per CBDT circular no:03/11)
  • Form 15G/H and other exemption certificates will be invalid and penal TDS will apply.

3. When do I become liable for TDS?
If the aggregate interest that you are likely to earn for all your deposits held across branches in a customer id is greater than Rs.40,000/- (Rs.50,000/- for senior citizen) in a financial year , you become liable for TDS.

Note: Tax liability for TDS purpose is determined basis per pan no and not as per branch per pan no . Deposits held by minors are also subject to TDS. The credit for the TDS can be claimed by the person in whose hands the minor’s income is included.


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