Senior Citizen FDs: Earn Up to 9.1% Interest

With a five-year term and a maximum capital of Rs 3 crore, senior folks can earn up to 9.1% income on fixed deposits.

According to Paisabazaar.com, these banks offer interest rates of up to 9.1% as of May 21, 2025, making them suitable for people 60 and over who want to open a fixed deposit.

9.1% at Suryoday Small Finance Bank

8.65% at Unity Small Finance Bank.

Up to 8.5 at Northeast Small Finance Bank

Up to 8.25% at Utkarsh Small Finance Bank

up to 8.2% at Jana Small Finance Bank

However, because small financing banks may be riskier than commercial banks, financial experts advise investing with caution. ET claims that though the Deposit Insurance and Credit Guarantee Corporation (DICGC) insures all deposits up to Rs 5 lakh, these banks’ business strategies diverge from those of scheduled commercial banks, thus putting depositors at greater risk.

How to address TDS in older adults

If a bank earns more than Rs 1 lakh in interest on FDs in a fiscal year, it must deduct Tax Deducted at Source (TDS). When you file your income tax return (ITR), TDS can be amended or reimbursed because it is not an additional tax.

For instance, a senior adult making Rs 11 lakh a year will not be required to pay any income tax under the new tax regime for FY 2025–2026 because of the Section 87A tax refund, which is applicable for incomes up to Rs 12 lakh. Nevertheless, after interest income above the Rs 1 lakh level, banks will continue to deduct TDS.

In these situations, qualified senior persons can file Form 15H to their banks, stating that their total income is below the taxable limit, to prevent needless TDS deductions.

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