There is a bonanza for senior citizens who love to invest in fixed deposits. Small finance banks, smaller and new private banks have lined up interest rates up to 9.1 percent on three-year FDs for senior citizens, data compiled by Paisabazaar shows. The elders should invest a part of their savings in fixed deposits, which offer liquidity and ensure interest income periodically. The savings are useful to build an emergency corpus. Although bank FD interest is taxable, a lower tax slab for most senior citizens ensures that tax liability is minimal or nil if other income is negligible. Here are the top three banks from each category i.e. small finance bank, private and public sector banks offering the highest interest rates in terms of their three-year fixed deposit interest rates to senior citizens.
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Suryoday Small Finance Bank offers a 9.1 percent interest on three-year FDs for senior citizens. Among small finance banks, it offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.31 lakh in three years.
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Utkarsh Small Finance Bank offers 8.85 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.30 lakh in three years.
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Fincare Small Finance Bank offers 8.60 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.29 lakh in three years.
DCB Bank offers 8.50 percent interest on three-year FDs for senior citizens. Among private-sector banks, it offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.29 lakh in three years.
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IndusInd Bank offers 8 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.27 lakh in three years.
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SBM Bank India offers 7.8 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.26 lakh in three years.
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Bank of Baroda offers 7.55 percent interest on three-year FDs for senior citizens. Among public-sector banks, it offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.25 lakh in three years.
Punjab National Bank offers 7.5 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.25 lakh in three years.
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Canara Bank offers 7.3 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
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Smaller private sector banks and new private banks are offering higher interest rates to garner newer deposits. The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the RBI, guarantees investments in fixed deposits of up to Rs 5 lakh.
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The data on FDs is as of August 2, as seen on lenders' websites. Interest rates are for senior citizens of 60-80 (deposit amount below Rs 1 crore). For all FDs, quarterly compounding is assumed.
Hiral Thanawala is a personal finance journalist with 9 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
