Fixed Deposits are a great tool to invest in if you want to safeguard your funds. It helps you to keep the money you deposit protected from inflation.
Inflation is a silent killer that slowly and gradually eats away the purchasing power of your money. Purchasing power is the ability of the money you have to buy stuff.
You might have noticed that the prices of goods and services keep on increasing year by year. This phenomenon is known as inflation when the prices of goods and services increase and the money’s value depreciates.
For example- the price of a pen used to be Rs.2/- 10 years ago but the same pen price is now Rs.5/- so, for Rs.2/-, you can purchase fewer goods and services as time passes and inflation increases.
The inflation of India is on average 4% however, in recent times due to COVID and Russia-Ukraine Conflict, the inflation rate increased by more than 6%.
The government is constantly working towards keeping the inflation rate minimum because it has a direct effect on the purchasing power of the individual which in turn affects the economy of the country.
So, FDs are a fairly important financial tool to understand and use hence, in this article, we will discuss Fixed Deposits, the Best FD Interest Rates in India in 2024, etc.
What is a Fixed Deposit?
A Fixed Deposit is a guaranteed return-based investment account that allows the individual to park his/her money in the account and receive returns for the investment made.
The period of the FD is fixed and can range from 10 days to 10 years. After maturity, the fixed deposit can be withdrawn along with the interest earned.
Other Key Details on Fixed Deposit
The following are the other key details on Fixed Deposits that will help you understand the FD tool for investment-
Taxation on Fixed Deposit
As per Section 194A of the Income-tax Acts, TDS will be dedicated to the interest earned on the Fixed Deposit. The TDS charged will be 10% if the interest amount exceeds Rs.40,000/- (For Senior Citizens the limit is Rs.50,000/-) during a financial year. If the PAN details are not provided, the TDS charged will be 20% of the interest earned.
Depositos who do have a taxable income can declare it in form 15G and form 15H (for senior citizens aged 60 & above) which will allow the banks to not deduct TDS on the FD interest.
Premature Withdrawal
In case of premature withdrawal, the investor has to pay a fee of 0.50 to 1.00% of the interest amount to prematurely close the FD account. This fee may vary depending on the bank’s policy.
How Interest Is Calculated on FD?
The interest calculated on the interest earned on FD Investment is simple. The formula for Simple Interest is as follows:
- Simple Interest=Principal x rate of interest x time period divided by 100, i.e., P x R x T/100
- Compound Interest= P {(1 + i/100) n – 1}, Where, P = Principal amount, n = number of years, i = rate of interest per period
Simple Interest or Compound Interest will be applied to the FD account on case-to-case bases, meaning, if the account is with up to 6 months of maturity, then the SI will be used to calculate the interest. If the Account is more than 6 months then the CI method will be used to calculate the interest.
Best FD Interest Rates in India 2024
The following are the FD interest rates in India of banks and NBFCs-
Public Bank Interest Rates
| Bank Name | Highest slab | 1-year tenure | 3-year tenure | 5-year tenure |
| Bank of Baroda | 7.05 | 6.75 | 6.75 | 6.25 |
| Bank of India | 7.05 | 6 | 6.5 | 6 |
| Bank of Maharashtra | 7 | 6.15 | 6 | 5.75 |
| Canara Bank | 7.15 | 6.75 | 6.5 | 6.5 |
| Central Bank of India | 7.35 | 6.75 | 6 | 6 |
| Indian Bank | 7 | 6.1 | 6.25 | 6.25 |
| Indian Overseas Bank | 7 | 6.4 | 6.5 | 6.5 |
| Punjab & Sind Bank | 7.25 | 6.25 | 6.25 | 6.25 |
| Punjab National Bank | 7.25 | 6.75 | 6.75 | 6.5 |
| State Bank of India | 6.75 | 6.75 | 6.25 | 6.25 |
| UCO Bank | 7.15 | 6.75 | 6.3 | 6.1 |
| Union Bank of India | 7.3 | 6.3 | 7.3 | 6.7 |
Private Bank Interest Rates
| Bank Name | Highest slab | 1-year tenure | 3-year tenure | 5-year tenure |
| Axis Bank | 7.26 | 6.75 | 7 | 7 |
| Bandhan Bank | 8 | 7.25 | 7.25 | 5.85 |
| City Union Bank | 7.75 | 6.75 | 7.25 | 6.9 |
| CSB Bank | 7.5 | 5 | 5.75 | 5.75 |
| DBS Bank | 7.25 | 6.25 | 6.5 | 6.5 |
| DCB Bank | 7.85 | 7.25 | 7.85 | 7.6 |
| Dhanlaxmi Bank | 7.25 | 6.25 | 6 | 6.1 |
| Federal Bank | 7.25 | 6.75 | 6.5 | 6.3 |
| HDFC Bank | 7 | 6.6 | 7 | 7 |
| ICICI Bank | 7 | 6.6 | 7 | 7 |
| IDBI Bank | 7.1 | 6.75 | 6.25 | 6.25 |
| IDFC First Bank | 7.5 | 6.75 | 7.5 | 7 |
| IndusInd Bank | 7.5 | 7 | 7.5 | 7.25 |
| Jammu & Kashmir Bank | 7.25 | 6.75 | 6.5 | 6.5 |
| Karnataka Bank | 7.3 | 6.8 | 5.75 | 5.75 |
| Karur Vysya Bank | 7.25 | 6.5 | 7 | 6.25 |
| Kotak Mahindra Bank | 7 | 6.75 | 6.5 | 6.2 |
| Nainital Bank | 7.05 | 6.6 | 6.25 | 5.75 |
| RBL Bank | 7.8 | 7 | 7 | 7 |
| SBM Bank India | 7.75 | 7.05 | 7.3 | 7.75 |
| South Indian Bank | 7.4 | 6.6 | 6.5 | 6 |
| Tamilnad Mercantile Bank | 7.25 | 6.75 | 6.5 | 6.5 |
| Yes Bank | 7.75 | 7 | 7 | 7 |
NBFC Interest Rates
| Bank Name | Highest slab | 1-year tenure | 3-year tenure | 5-year tenure |
| AU Small Finance Bank | 7.75 | 6.1 | 7.75 | 7.2 |
| Capital Small Finance Bank Limited | 7.5 | 7.1 | 7.1 | 7.1 |
| Equitas Small Finance Bank | 8 | 7.5 | 7.75 | 7 |
| ESAF Small Finance Bank | 8 | 5.5 | 5.75 | 5.25 |
| Fincare Small Finance Bank | 8 | 7.25 | 7 | 7 |
| Jana Small Finance Bank | 8.1 | 7.25 | 8.1 | 7.25 |
| North East Small Finance Bank | 8 | 6.5 | 7.25 | 6.25 |
| Shivalik Small Finance Bank Limited | 8 | 7.5 | 8 | 7 |
| Suryoday Small Finance Bank | 8.51 | 7 | 7.25 | 6.75 |
| Ujjivan Small Finance Bank | 8 | 6.5 | 7.2 | 7.2 |
| Unity Small Finance Bank | 8.5 | 7.35 | 7.65 | 7.65 |
| Utkarsh Small Finance Bank | 8 | 7.5 | 7.5 | 7.5 |
FAQ
Tax Saving Fixed Deposit account is an account where the investor can claim a tax deduction under Section 80C of the Income-tax Act, 1961.
Yes, TDS will be applicable on the Fixed Deposit investment.
In case, you’ve withdrawn your FD Account prematurely, you’ll receive the funds back after the deduction of the penalty which is based on the interest earned. This value will be no less than the principal amount and is calculated based on a certain percentage of the interest earned.
The minimum amount that you can invest in FD Account is Rs.1000/- and there is no limit on the maximum amount that you can invest.
