New Delhi: The interest rate cycle in India is firmly on a downswing. In two consecutive meetings the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to slash the benchmark Repo Rate by a total of 50 basis points, with 25 basis points trimming in each meeting. The largest bank in India SBI in a research paper has predicted that the total cut in rates will reach 100 basis points by March 2026. Any cut in the Repo Rate leads to a cut in the FD rates for banks too. A large number of Indians are critically dependent on the interest income from bank FDs and the current downcycle of interest rates will impact them. Banks are already slashing lending rates and could soon start cutting deposit rates too.
Of the entire bouquet of FDs, one of the most popular FDs is the fixed deposit of 5-year tenure. It not only gives one a long-term interest income but also is eligible for income tax deductions under Section 80C of the Income Tax Act 1961. Let’s have a look at the rate of interest the country’s top banks are offering general customers and senior citizens. All the above rates are applicable for retail deposits, ie, for amounts below Rs 3 crore. The rates differ if the amount of deposit exceeds that amount.
State Bank of India (SBI): The largest commercial bank in the country, State Bank of India is offering 6.50% interest to general depositors and 7.50% interest to senior citizens on FDs with maturity period of 5 years.
HDFC Bank (HDFC): HDFC Bank is the largest private sector lender in India It is offering 7% interest to the general public and 7.50% to senior citizens on FDs maturing in 5 years.
ICICI Bank (ICICI): This major private sector lender is offering 6.9% rate of interest to general depositors on 5-year tax saver FDs and 7.4% to senior citizens.
Punjab National Bank (PNB): PNB is the second biggest PSU bank in the country. It is offering 6.50% to general customers and 7% to senior citizens on 5-year deposits. PNB also has a super senior citizen age basket and is paying them 7.3% for the FD of the same tenure.
Axis Bank: This private sector major bank is paying 7% on 5-year FDs to general customers and 7.75% to senior citizens on the five-year fixed deposits.
Kotak Mahindra Bank: This private sector lender is offering interest at the rate of 6.2% on five-year fixed deposits to general customers and 6.7% to senior citizens.
Despite the lower returns of fixed deposits, millions of risk-averse Indians — mostly retirees and senior citizens — are critically dependent on them for interest income. The five-year FD is of special interest to many since it also offers tax benefits in the old tax regime. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
