Senior Citizens Can Earn Up to 8.1% on 5-Year Fixed Deposits: Best FD Options in 2025

FD Rates Up to 8.1% for Senior Citizens Investing for Five Years: Know the Best Fixed Deposit Options in 2025

Senior citizens looking for safe and guaranteed returns continue to find fixed deposits (FDs) one of the most reliable investment options. As interest rates remain elevated, several small finance banks are offering attractive FD returns of up to 8.1% for senior citizens opting for a five-year term.

Among the leading banks, Suryoday Small Finance Bank tops the chart with an 8.1% interest rate, followed by Jana Small Finance Bank offering 8%, and Utkarsh Small Finance Bank providing up to 7.7% on similar tenure deposits. These rates are applicable for investments up to ₹3 crore by individuals aged 60 years and above.

Suryoday Small Finance Bank Offers the Highest FD Rate at 8.1%

Suryoday Small Finance Bank is currently providing one of the highest fixed deposit interest rates for senior citizens in India. A five-year FD earns a return of 8.1% per annum, making it an attractive choice for retirees seeking stable income and capital safety.

The interest can be received either monthly, quarterly, or at maturity, depending on the investor’s preference. For instance, a ₹10 lakh deposit for five years at 8.1% interest could yield around ₹4.8 lakh in total interest income at maturity.

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Jana Small Finance Bank Offers 8% Interest on 5-Year Deposits

Coming close behind is Jana Small Finance Bank, which offers an 8% interest rate on five-year FDs for senior citizens. The bank’s FD products cater to customers looking for liquidity and higher yields without market risks.

Jana SFB’s deposit schemes also provide premature withdrawal flexibility, subject to nominal penalties, making them suitable for investors who may need access to funds in case of emergencies.

Utkarsh Small Finance Bank FD Rate Up to 7.7%

Utkarsh Small Finance Bank is another player offering competitive interest rates. The bank provides up to 7.7% per annum on five-year FDs for senior citizens. While slightly lower than Suryoday and Jana, Utkarsh’s consistent performance and secure structure make it a dependable option for risk-averse investors.

All three small finance banks are covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme, which insures deposits up to ₹5 lakh per depositor per bank, ensuring an extra layer of safety.

Comparative FD Rates for Senior Citizens (Five-Year Tenure)

These high FD rates provide senior citizens with a secure and predictable income stream, especially when compared to traditional savings accounts that typically offer 3–4% returns.

source: Paisabazaar.com

Understanding TDS Rules on Fixed Deposit Interest

While the returns from FDs are attractive, investors must be aware of tax deducted at source (TDS) provisions. Banks are required to deduct TDS when the total annual interest earned from FDs exceeds ₹1 lakh for senior citizens.

However, TDS is not an additional tax—it’s merely a prepayment toward your total tax liability. You can claim a refund or adjust it while filing your Income Tax Return (ITR) if your total income is below the taxable limit.

For example, under the new tax regime for FY 2025–26, senior citizens with a total income up to ₹12 lakh can avail of the Section 87A rebate, effectively bringing their income tax liability to zero.

How Senior Citizens Can Avoid TDS Using Form 15H

Even if no tax is payable, banks automatically deduct TDS once the interest exceeds ₹1 lakh per financial year. To prevent this, senior citizens can submit Form 15H to their respective banks.

Form 15H is a self-declaration form stating that your total income is below the taxable threshold. Once submitted, the bank will not deduct TDS on your fixed deposit interest.

Under the new tax regime, the exemption limit for senior citizens is ₹12 lakh, while under the old regime, it stands at ₹5 lakh. If your income remains within these limits after deductions, you can safely file Form 15H to avoid unnecessary TDS.

💡 Tip: Always submit Form 15H at the beginning of each financial year to ensure that banks do not deduct TDS automatically.

Why Small Finance Banks Offer Higher FD Rates

Small finance banks often provide higher interest rates than traditional large banks because they aim to attract retail depositors and expand their customer base. They primarily lend to micro, small, and medium enterprises (MSMEs) and rural borrowers, which allows them to generate higher lending margins—translating into better deposit rates.

However, investors should always ensure that the bank is RBI-regulated and covered under DICGC insurance for maximum safety.

Final Take: Attractive FD Options with Tax Efficiency

With interest rates hovering at multi-year highs, senior citizens can lock in attractive returns by choosing small finance banks like Suryoday, Jana, and Utkarsh. These institutions offer secure, high-yield FDs with returns up to 8.1%, significantly above what most large banks provide.

At the same time, understanding TDS rules and submitting Form 15H can ensure that retirees enjoy their interest income without unnecessary tax deductions.

In today’s uncertain market environment, fixed deposits remain a trusted and steady investment option—and for senior citizens, the combination of high interest rates and tax-efficient planning makes them even more rewarding.

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