highest FD interest rates: banks offering the highest FD interest rates

One of the most popular investment options is fixed deposit (FD). Many investors prefer bank FDs to stocks because the latter are considered safer. Fixed deposits are also called term deposits. This is because the money is placed with a bank for a specific period or duration. There are a few things you need to know before setting up a savings account.

Here are the banks offering the best 1, 2, 3, 5 year rates for ordinary citizens.

Best FD Interest Rates with 1 Year Term

Bank name 1 year Compound return Qly
RBL Bank 6.25 10639.80
DCB Bank 6.00 10613.64
First IDFC Bank 6.00 10613.64
industrial bank 6.00 10613.64
Bandhan Bank 5.75 10587.52

Best FD interest rates with a 2 year term

Bank name 2 years Compound return Qly
DCB Bank 6.50 11376.39
industrial bank 6.50 11376.39
RBL Bank 6.50 11376.39
Bandhan Bank 6.25 11320.54
First IDFC Bank 6.00 11264.93

Best FD interest rates with a 3-year term

Bank name 3 years Compound return Qly
DCB Bank 6.50 12134.08
industrial bank 6.50 12134.08
RBL Bank 6:30 p.m. 12062.63
Bandhan Bank 6.25 12044.83
First IDFC Bank 6.00 11956.18

Best FD interest rates with a 5 year term

Bank name 5 years Compound return Qly
DCB Bank 6.60 13872.27
industrial bank 6.50 13804.20
RBL Bank 6:30 p.m. 13669.00
First IDFC Bank 6.25 13635.39
Kotak Mahindra Bank 5.90 13402.36

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

Opening a deposit account

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

Interest payment

The interest rate on term deposits (FD) varies depending on the term you are investing for, as well as from bank to bank for FDs of the same duration. Interest rates are often higher for seniors. You have the option of receiving interest payments on a cumulative or non-cumulative basis.

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

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


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 the current tax laws, if the payment of interest in a single financial year exceeds Rs 10,000, the TDS would be deducted by the bank. To avoid TDS, complete Form 15G or Form 15H (as applicable) and send it to the bank.
Premature withdrawal
If a person is in dire need, they can break their FD before it matures. Premature withdrawals may result in a penalty from the bank. The amount of the penalty varies from bank to bank.

When booking an FD, be sure to read the rules for early withdrawals. Banks sometimes give DFs an early withdrawal penalty as well as an early withdrawal penalty.

Availability of a loan

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

Automatic renewal

If no special instructions are given at maturity, most banks will automatically roll over the FD for the same period for which it was originally placed, at the prevailing interest rates at the time of the FD’s maturity. . You must select this option on the account opening form if you do not wish your FD to be automatically renewed.

If you forgot to mention it, you can go to the bank branch on the due date and ask for the money to be credited to your account.

FAQ according to 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 the following month of the respective quarter.

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

  • TDS will be recovered at 20% (from 10%)
  • NO Income Tax Service TDS Credit
  • NO TDS certificate will be issued (in accordance with CBDT circular n° 03/11)
  • Form 15G/H and other exemption certificates will be invalid and criminal TDS will apply.

3. When do I become responsible for the TDS?
If the aggregate interest you are likely to earn for all your deposits held in branches of a client ID is greater than Rs.40,000/- (Rs.50,000/- for seniors) in a financial year, you become responsible for the TDS.

Note: Tax liability for TDS purposes is determined based on tray number and not branch per tray number. 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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