Best Fixed Deposit Interest Rates for Senior Citizens

by Nikita Verma on May 9, 2012

in Investments

Updated: 28th Dec 2012

Continuing with the theme of fixed income, let’s look at some of the best fixed deposit interest rates that are on offer for senior citizens right now.

While it is common to see banks offer 0.50% extra over their regular fixed deposits to senior citizens, it is wrong to assume that the difference is always 0.50%. Some banks offer 0.75% and in the case of Yes Bank, they currently offer 1.0% extra over their regular fixed deposits.

The key thing that stands out from the list below is that there are several banks that offer upwards of 10.00% for a senior fixed deposit and that’s the minimum you should look for in today’s environment.

That’s the final list sorted according to the best interest rates I could find.

 

S.No.

Bank

Tenure

Interest Rate

1 Dhanalaxmi Bank

400 days

10.00%

2 Yes Bank

15 months 15 days

10.00%

3 South Indian Bank

1 year to less than 2 years

9.50%

4 Karur Vysya Bank

Above 2 years to 3 years

9.75%

5 Lakshmi Vilas Bank

1 year

10%

6 Karnataka Bank

1 year to 5 years

9.50%

7 City Union Bank

1 year

10%

8 State Bank of Patiala

555 days

9.50%

9 Axis Bank

18 months to 5 years

9.75%

10 Indian Bank

9 months and above

9.50%

11 Syndicate Bank

364 days to 2 years

9.25%

12 Bank of India

1 to 2 years

9.25%

13 Tamil Nadu Mercantile Bank

20 months 20 days

9.75%

14 Punjab and Sind Bank

500 days

9.75%

15 IDBI Bank

1 year to 5 years

9.75%

16 J&K Bank

1 year to 10 years

9%

17 Vijaya Bank

1 year and above

9.50%

18 Indian Overseas Bank

1  – 10 years

9.50%

19 ICICI Bank

2 years to less than 5 years

9.50%

20 Kotak Bank

1 year

9.50%

21 Andhra Bank

1 year to 10 years

9.50%

22 Corporation Bank

12 months and above

9.25%

23 Federal Bank

1 year to 3 years

9.50%

24 State Bank of Travancore

1 year to 3 years

9.25%

25 Canara Bank

1 year to 10 years

9%

26 Bank of Baroda

1 year

9.25%

One final thing about this is if you’re opening a senior citizen fixed deposit you should be aware of form 15H which you can use to prevent the bank from deducting tax at source if your total income for that year is expected to be lesser than the taxable income limit. Here is a good link that explains form 15H and form 15G in detail.

Edit: Corrected error pointed out by Paresh

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{ 22 comments… read them below or add one }

DJ May 9, 2012 at 7:05 am

Why should anyone bother with FDs with 30% tax, when they can buy short term debt mutual funds with the same interest rates with 15% tax?

Reply

Manshu May 9, 2012 at 6:52 pm

Not everyone is in the 30% tax bracket, and not everyone is comfortable with the indicative yields on debt mutual funds. Different people have different needs and what suits one may not suit another.

Reply

bemoneyaware May 9, 2012 at 8:53 am

Thanks Manshu for including link to our post on Form 15G and 15H.
Giving good links is something we really appreciate and have learnt from you and try to use it in our posts.

Reply

Manshu May 9, 2012 at 6:51 pm

Linking relevant posts is a win win for everyone. Not many bloggers like or accept this though. Don’t know why, perhaps a bit of insecurity.

Reply

Saumya May 9, 2012 at 11:39 am

Hi Manshu

A lot of thanks for a much awaited post on best fixed deposit interest rates.

I have a query.
Suppose I gift Rs 1 lakh to my grandmother (67+, a senior citizen) and she opens a fixed deposit account with a bank. The interest earned will be treated as her income or as mine.

Is provision of clubbing of income apply in this case, as in case of spouse, minor children etc.?

Thanks

Reply

Manshu May 9, 2012 at 6:45 pm

I’m not up to date with the clubbing provisions so I’ll wait for someone else to answer this. I’ll be sure to research and answer at a later point if no one else responds.

Reply

Saumya May 10, 2012 at 11:53 am

Thanks Manshu for showing concern to my query.
Will wait for your answer at a later point.
Please do reply.

Reply

Manshu May 13, 2012 at 1:41 am

Hi Saumya,

Here is what I found when I searched this. If you gift more than Rs. 50,000 to anyone then that person is liable to pay tax on it. However, this isn’t applicable in the case of linear ascendants or descendants so I think your gifting any cash to your grandma is not covered under this and any interest she earns from the FD will be treated as her income.

I found this on a few links and I’m pasting one here which was most exhaustive so you can read yourself.

http://taxbymanish.blogspot.com/2012/03/law-on-taxability-of-gifts-under-income.html

Normally, in these cases I go back to the act and read the act as well, but I’m unable to find the act that these guys are referring to. So, I’m not 100% sure that this is the correct interpretation and there’s nothing new after this but I wanted to at least share with you what I found so you can then talk to someone else and confirm this as well.

Reply

Saumya May 14, 2012 at 6:44 pm

Many thanks to you Manshu for the reply.

I also visited some blogs but did not get satisfactory answer there. They mentioned that income will be clubbed in the cases of spouse, minor child and daughter in law. Nothing is mentioned about other relatives. Even the act specifies these 3 relations only.

One CA forum mentioned that such income will be clubbed with donor. I also contacted a CA and he said that the income will not be clubbed, if supported with documents like gift deed.

I have posted my query to some blogs/forums and yet to receive any reply but hope to receive some, in due course.

Thanks to you once again.

Reply

Paresh May 10, 2012 at 9:25 am

You have really make work easy for senior citizens..
But I can view that Karnataka bank rate of interest is 9.75% for general public and 10.25% for sr.citizens for the said period.

Reply

Manshu May 10, 2012 at 7:16 pm

Oops, what a bad error I made! Thanks for pointing it out Paresh! corrected now.

Reply

Ramesh June 7, 2012 at 7:09 pm

Fixed Deposit rates are showing a tendency to decrease rates now. SBI has already reduced by .25%. the same is true for RDs

I think it is the best time to invest for long term say 5 years before rates fall. And if you donot have surplus cash, you can always reserve your berth by investing in RDs for 5 years thus insuring your higher interest rates above 10% for next 5 years even if rates fall below 8%

Am I right?

Reply

K.B.Raghavan October 9, 2012 at 10:24 am

kindly revert which nationalised banks are giving maximum F.D. Interest for a period 3 years or 5 years currently.

Reply

p.k.saha November 4, 2012 at 8:06 pm

i am retired person and Sr.Citizen . I Want to invest Rs.1000000.00 to FD in bank.
Please advise for suitable name of the bank.
NB: I want qtrly. interest.
Regards,
P.K.Saha

Reply

pradip shah March 12, 2014 at 10:53 pm

sir
i have seen your bank fd rate, on front side fd rate is not correct. when open the bank fd rate different so pl correct and change fd rate on frontage bank fd rate list

pradip

Reply

kamal kumar bhattacharyya May 14, 2014 at 3:55 pm

on 14.5.2014 I went to SBI Chatterjeehat Branch at 10am, collect token no 31, duly filled up withdrawal form, after waiting more than 40 minutes, my turn case went to counter but 4 no counter man told me that as you have cheque book, I cannot withdraw cash by withdrawal slip. I request him that for 80 years Senior Citizen please consider but in vain. I deposited one cheque from UBI on 8.5.2014 but till today i.e. 14.5.2014 it is not credited.

Reply

kamal kumar bhattacharyya May 14, 2014 at 3:59 pm

For Sr.Citizen SBI offers 9.25%, UBI 9%,UCO 9.50%,BOI 9.75% etc.

Reply

Vinit Kumar Doshi May 17, 2014 at 10:11 am

I am NRI Sr citizen. Can someone let me know if I place my Fixed Deposits in any Indian Banks can I be entitle to get the same rate if interest offered by Indian banks to their local Sr. Citizens.

Reply

Manshu May 20, 2014 at 2:03 am

If you are a NRI then you have the option to open a NRE fixed deposit which is a better option anyway because they are tax free.

Reply

harshith June 28, 2014 at 6:43 pm

the fd intetest for senior citizens. ….. is dat interest rates mentioned are per month? ????? ir per annum? ????

Reply

harshith June 28, 2014 at 6:44 pm

or*

Reply

V K Aggarwal July 12, 2014 at 11:35 am

Kindly supply me the list of Maximum Rate of Interest on Fixed Deposits by the Senior Citizens paid by the Banks situated at Bathinda (Pb) city.

Reply

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