Unity Small Finance Bank has increased fixed deposit rates for specific tenures, offering up to 8.5% for senior citizens on a 501-day deposit. These new rates, effective from July 15, apply to retail deposits under ₹3 crore and are intended to attract more stable long-term funds.
Unity Small Finance Bank has revised its retail fixed deposit interest rates effective July 15, 2026. The most significant change is for the 501-day tenure, which now offers 8.00% for general customers and 8.50% for senior citizens. This specific duration currently provides the highest return available within the bank's retail portfolio for deposits valued below ₹3 crore.
Impact on Deposit Tenures
Beyond the special 501-day offer, the bank has updated rates across several other maturity buckets. A standard one-year fixed deposit now earns 7.50% for general customers and 8.00% for senior citizens. For deposits with tenures ranging between 502 days and five years, the bank is offering 6.75% for general depositors and 7.25% for senior citizens. While these changes impact fixed deposits, the bank’s savings account interest rates remain unchanged, continuing to offer 4.50% for balances up to ₹1 lakh, 6.00% for balances between ₹1 lakh and ₹10 lakh, and 7.00% for balances above ₹10 lakh.
Understanding the Policy and Risks
For investors planning to utilize these rates, it is important to understand the bank's premature withdrawal policy. If a depositor withdraws funds before the maturity date, the bank will apply a penalty of 1 percentage point against the interest rate that was applicable for the period the money was held. This means the actual return could be lower than the advertised rate if the funds are not kept for the full term.
Small finance banks typically offer higher interest rates compared to larger commercial banks to attract deposits, as they often have a more concentrated loan book and rely on retail deposits to maintain liquidity. Investors should note that while fixed deposits are generally considered a safer asset class, they are subject to the same insurance limits provided by the DICGC, which covers aggregate deposits up to ₹5 lakh per depositor in the event of a bank failure. As the banking sector manages fluctuating credit demand, tracking how these deposit costs impact the bank's net interest margin—the difference between interest earned from loans and interest paid to depositors—will be the next important monitorable for those assessing the bank's financial stability.