Securing your retirement funds is a top priority, and for senior citizens, Fixed Deposits (FDs) continue to be an attractive option, offering competitive interest rates even amidst recent shifts in the financial landscape. As of July 2025, you can still find excellent returns on your FDs, with some banks offering rates as high as 9.10%.
Understanding the Current FD Landscape
The Reserve Bank of India (RBI) has made several repo rate cuts in 2025, totaling 100 basis points (1%). These cuts, including a significant 50 bps reduction in June, generally lead to banks lowering their lending and deposit rates. However, banks are still offering robust interest rates for senior citizen FDs, recognizing the importance of these investments.
Top FD Rates for Senior Citizens (July 2025)
While public and private sector banks offer decent rates, small finance banks are leading the way with the highest interest rates for senior citizens.
Highest Rates from Small Finance Banks:
- Unity Small Finance Bank: Up to 9.10% (for 1001 days)
- Suryoday Small Finance Bank: Up to 8.80%
- Utkarsh Small Finance Bank: Up to 8.75%
- Shivalik Small Finance Bank: Up to 8.55%
- slice Small Finance Bank: Up to 8.50%
- Fincare Small Finance Bank: Up to 8.25%
Highest Rates from Other Banks:
| Public Sector Banks | 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 |
| Private Sector Banks | Highest Interest Rate (%) |
| SBM Bank | 8.55 |
| Bandhan Bank | 7.90 |
| CSB Bank | 7.90 |
| DCB Bank | 7.90 |
| RBL Bank | 7.80 |
Beneficial Tax Changes for Senior Citizen FDs
Good news for senior citizens! From April 1, 2025, the threshold for TDS (Tax Deducted at Source) on FD interest has been significantly increased. Banks will now only deduct TDS if your total interest earned in a financial year exceeds ₹1 lakh, a substantial rise from the previous ₹50,000 limit.
Furthermore, if your income falls below the taxable limit (which is ₹12 lakh starting from FY26 under the new tax regime), you can submit Form 15H to your bank. This self-declaration form helps you avoid TDS deduction, even if your interest income crosses the ₹1 lakh mark.
Considering these attractive rates and favorable tax regulations, FDs remain a robust and reliable investment choice for senior citizens seeking stable returns on their savings.