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10 best fixed deposits in India 2026 (highest interest rates by tenor)

By Teja Pagidimarri ~10 min read
Numbers updated… · sources
TL;DR

Indian fixed deposit rates in May 2026 range from 6.50 percent (large PSU banks for short tenors) to 9.00 percent (small finance banks for medium tenors). RBI repo rate cut to 6.25 percent in May 2026 has begun pushing FD rates lower; bank-by-bank the pass-through happens with a 1-2 month lag. Senior citizens get +50 basis points premium (0.50 percent higher rate). For non-senior investors seeking the highest yield with deposit insurance: small finance banks (DICGC insured up to Rs 5 lakh per bank per depositor) currently offer 8.50-9.00 percent for 2-3 year tenors. Diversify across 2-3 small finance banks to stay within insurance limits. Compare scheduled commercial banks (SBI, HDFC, ICICI) at 7.0-7.5 percent against small finance at 8.5-9.0 percent: the small finance premium is real but comes with the responsibility of staying within DICGC limits.

FD rate landscape May 2026

After RBI cut its repo rate to 6.25 percent in May 2026, FD rates have begun softening. The transmission is gradual:

Large PSU banks (SBI, BoB, PNB)Large private banks (HDFC, ICICI, Axis, Kotak)Mid-tier private banks (RBL, IndusInd, Yes)Small finance banks (Unity, Equitas, Suryoday, Jana, AU, Ujjivan, Capital)
1 year: 6.80-7.10%1 year: 6.85-7.25%1 year: 7.25-7.85%1 year: 7.50-8.50%
2-3 years: 6.90-7.25%2-3 years: 7.00-7.50%2-3 years: 7.75-8.10%2-3 years: 8.00-9.00%
5 years: 6.50-7.00%5 years: 6.50-7.10%5 years: 7.00-7.75%5 years: 7.50-8.65%

Senior citizens: add 50 basis points (0.50 percent) to ALL above rates.

Deposit insurance: DICGC covers up to Rs 5 lakh per bank per depositor. Above Rs 5 lakh, diversify across banks.

Best 2026 strategy: ladder FDs across tenors (1, 3, 5 year) and across 2-3 banks to balance yield + liquidity + safety.

FD rate comparison May 2026 (3-year tenor)FD rate comparison May 2026 (3-year tenor)Unity SFB9Equitas SFB8.5Bandhan8.1IDFC FIRST7.8RBL7.8HDFC7.2SBI7.1

Top 5 FDs by rate

1. Unity Small Finance Bank
- 3-year rate: 9.00% (senior 9.50%)
- 5-year: 8.50%
- Recently merged with PMC Cooperative (RBI-mandated)
- Strong recovery; rates among highest in industry
- DICGC covered up to Rs 5 lakh

2. North East Small Finance Bank
- 2-year: 8.75%
- Smaller operational footprint (Northeast India + select metros)
- Online application via website

3. Equitas Small Finance Bank
- 1-3 year: 8.50%
- 5-year: 8.25%
- Largest SFB by deposit base (Rs 30,000+ crore)
- Strong digital app, paperless FD booking

4. Suryoday Small Finance Bank
- 5-year: 8.65% (highest 5-yr among SFBs)
- 2-3 year: 8.50%
- Mumbai-based; strong online presence

5. Jana Small Finance Bank
- 2-3 year: 8.50%
- 5-year: 8.10%
- Bengaluru-based; strong rural + tier-2 city presence

Top 10 FD rates 2026 (non-senior, regular customer)
RankBankBest rateTenor
1Unity SFB9.00%3 yr
2North East SFB8.75%2 yr
3Suryoday SFB8.65%5 yr
4Equitas SFB8.50%1-3 yr
5Jana SFB8.50%2-3 yr
6Bandhan Bank8.25%5 yr
7IDFC FIRST8.10%5 yr
8RBL Bank7.85%2-3 yr
9IndusInd7.75%2-3 yr
10Yes Bank7.75%2 yr

Ranks 6-10

6. Bandhan Bank
- 5-year: 8.25%
- 1-3 year: 7.85-8.10%
- Universal bank (not SFB anymore - upgraded 2024)
- Higher comfort than pure SFBs for risk-averse investors

7. IDFC FIRST Bank
- 5-year: 8.10%
- 1-3 year: 7.75-8.00%
- Listed private bank; well-capitalized
- Strong digital app

8. IndusInd Bank
- 2-3 year: 7.75%
- 5-year: 7.25%
- Premium private bank; growing FD book
- Better processing than smaller peers

9. RBL Bank
- 2-3 year: 7.85%
- 5-year: 7.50%
- Recovery story post-2022 issues; rates remain competitive

10. Yes Bank
- 2-year: 7.75%
- 1-year: 7.25%
- Post-rescue, conservative deposit base
- Lower 5-year rates than peers

Post-tax return on Rs 5L FD by slab
SFB 9% in 5% slab
8.55% net
SFB 9% in 20% slab
7.20% net
SFB 9% in 30% slab
5.95% net
PSU 7% in 30% slab
4.62% net

Choosing a tenor: what to optimize for

CASH FLOW or savings parkingKNOWN GOAL (3-5 years)LONG-TERM CONSERVATIVE (10+ years)SENIOR CITIZEN incomeLADDERING (recommended)
Sweep-in FD linked to savings account2-3 year FD at peak rates (8.0-9.0% in SFB)5-year FD at 7.5-8.5% (SFB)5-year SCSS at 8.2% (max Rs 30 lakh per senior)Split funds across 1, 3, and 5-year FDs
7-day to 6-month tenor at 5.5-7.0%Reinvest at maturity if rates remain attractiveTax-saving FD (5-year fixed lock) for 80CSenior premium FDs: add 50 bps1/3 each, mature each year
Liquid but lower rateBest balance of yield + reasonable lockOr consider PPF (7.1% tax-free, 15-year)Monthly interest payout option for living expensesRenew at then-current rates
Smooths interest rate cycles

Tax treatment + alternatives

FD interest is fully taxable as ordinary income:

  • TDS at 10% applies if annual interest exceeds Rs 40,000 (Rs 50,000 for seniors)
  • Banks file Form 26AS automatically with your interest income
  • Below TDS threshold: still report and pay tax
  • At 30% slab: Rs 1 lakh interest = Rs 30K tax
  • Section 80TTA gives Rs 10,000 deduction on savings interest only (not FDs)
  • Section 80TTB gives Rs 50,000 on combined savings + FD interest, seniors only
For non-seniors in the 30% slab, FD net return after taxFor seniors with 80TTB
8.5% FD = 5.95% post-taxFD up to Rs 50K interest is tax-free
Compare to ELSS or index fund: 12-15% gross, 10% LTCG = 10.8-13.5% net8.5% FD up to Rs 5.88 lakh principal: 100% net
Excellent for retirees in 5-10% slab

Alternatives worth considering:

  1. Tax-saving FD: 5-year lock-in, 80C deduction (Rs 1.5L cap), but interest still taxable.
  2. Senior Citizen Savings Scheme (SCSS): 8.2% taxable, 5-year lock-in, max Rs 30L per senior. Better than most senior FDs.
  3. PMVVY (Pradhan Mantri Vaya Vandana Yojana): closed in 2024.
  4. RBI Floating Rate Savings Bonds: 8.05% (May 2026), reset every 6 months at NSC rate + 35 bps. 7-year lock-in. Tax-free interest credit but you still pay income tax. Great inflation hedge.
  5. Corporate FDs (HDFC, Bajaj, LIC HFL): 8.5-9.0% but no DICGC insurance. Higher risk; only AAA-rated NBFCs.

Run the math for your situation

Use our IN calculator to plug in your own numbers.

Frequently asked questions

Quick answers people search for.

Which bank has the highest FD rate in India 2026?

Unity Small Finance Bank at 9.00% for 3-year tenor (9.50% for seniors). Other SFBs offer 8.50-8.75%. Among large banks, IDFC FIRST and Bandhan top at 8.10-8.25% for 5-year.

Are FDs in small finance banks safe?

They are DICGC insured up to Rs 5 lakh per bank per depositor, same as scheduled commercial banks. To stay fully insured, diversify across 2-3 SFBs and keep each deposit under Rs 5 lakh.

What is the senior citizen FD rate premium?

50 basis points (0.50%) higher than the regular rate at most banks. So a 7.50% FD becomes 8.00% for seniors. Plus Section 80TTB gives Rs 50,000 tax-free interest exemption for seniors.

Is FD interest taxable?

Yes, fully. Banks deduct TDS at 10% if annual interest exceeds Rs 40,000 (Rs 50,000 for seniors). After tax, an 8.5% FD yields only about 5.95% in the 30% slab.

FD or ELSS - which is better?

For 5+ year horizons: ELSS typically wins. 12-15% gross return vs 8% FD; ELSS has 10% LTCG (vs 30% on FD interest), giving 10.8-13.5% net for ELSS vs 5.95% net for FD at 30% slab.