senior citizens can still find attractive fixed deposit (FD) interest rates, with some small finance banks offering up to 8.8% in July 2025.
Thank you for reading this post, don't forget to subscribe!Understanding the Current FD Landscape
The Reserve Bank of India (RBI) has cut the repo rate by 100 basis points (1%) so far in 2025, including a significant 50 bps cut in June. When the RBI lowers the repo rate, it becomes cheaper for banks to borrow money, which in turn leads them to reduce interest rates on FDs. This is because banks no longer need to offer high FD rates to secure funds.
Despite these revisions, many banks are still providing favorable rates for senior citizens, largely due to increased competition and a continued need for deposits. Additionally, senior citizens benefit from a higher TDS deduction threshold on FD interest, now at ₹1 lakh per financial year (effective April 1, 2025), up from ₹50,000 previously. Those whose income is below the taxable limit (under ₹12 lakh starting FY26) can also submit Form 15H to avoid TDS deduction, even if their interest income exceeds ₹1 lakh.
Highest Senior Citizen FD Rates in July 2025
While small finance banks are leading the way with the highest offerings, many public and private banks also provide competitive rates.
Small Finance Banks (Highest Rates)
| Bank Name | Highest Interest Rate (%) |
| Suryoday Small Finance Bank | 8.80% |
| Utkarsh Small Finance Bank | 8.75% |
| Shivalik Small Finance Bank | 8.55% |
| slice Small Finance Bank | 8.50% |
| Fincare Small Finance Bank | 8.25% |
| Jana Small Finance Bank | 8.25% |
| Ujjivan Small Finance Bank | 8.25% |
| Unity Small Finance Bank | 8.25% |
| Equitas Small Finance Bank | 8.20% |
Private Sector Banks
| Bank Name | Highest Interest Rate (%) |
| SBM Bank | 8.55% |
| YES Bank | 7.85% |
| RBL Bank | 7.80% |
| IndusInd Bank | 7.75% |
| Bandhan Bank | 7.90% |
| CSB Bank | 7.90% |
| DCB Bank | 7.90% |
Public Sector Banks
| Bank Name | Highest Interest Rate (%) |
| Punjab & Sind Bank | 7.55% |
| Bank of India | 7.50% |
| Central Bank of India | 7.50% |
| Indian Overseas Bank | 7.45% |
| Indian Bank | 7.40% |
| State Bank of India | 7.35% |
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Key Considerations for Senior Citizens
- Small finance banks generally offer the best rates. They aim to attract more deposits and often outcompete larger banks.
- Check specific tenures. The highest rates are often offered for particular deposit durations.
- “Super senior citizens” (80+ years) may receive even higher rates from some banks. For instance, Indian Overseas Bank, Indian Bank, and Punjab National Bank offer additional benefits for this age group.
Always verify the latest rates directly with banks before investing, as interest rates can change.
