Fixed Deposit Interest Rates See Gradual Increase, Small Finance Banks Lead

Banking/Finance

Updated on 03 Nov 2025, 07:21 am

Reviewed By

Aditi Singh | Whalesbook News Team

Short Description :

Interest rates on fixed deposits (FDs) in India are gradually rising, particularly for 3-year terms. Utkarsh Small Finance Bank offers the highest rate at 7.65%, followed by other small finance banks. Private sector banks offer competitive rates, while public sector banks provide stability with moderate returns. Investors are advised to consider risk appetite and invest within DICGC insurance limits when choosing small finance banks.

Fixed Deposit Interest Rates See Gradual Increase, Small Finance Banks Lead

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Stocks Mentioned :

Utkarsh Small Finance Bank

AU Small Finance Bank

Detailed Coverage :

Indian savers are witnessing a gradual rise in fixed deposit (FD) interest rates, especially for 3-year terms, with some reaching 7.65%. Utkarsh Small Finance Bank offers the highest rate at 7.65% for a 3-year FD. Other small finance banks like Slice, Jana, Suryoday, and AU offer competitive rates between 7.10% and 7.50%. Experts advise caution with small finance banks, recommending deposits stay within the Rs 5 lakh DICGC insurance limit due to their different operating model.

Private sector banks provide competitive options, with RBL Bank at 7.20%, SBM Bank India at 7.10%, and Bandhan Bank, Yes Bank, DCB Bank offering 7%. Leading banks like ICICI and Axis Bank offer 6.60%.

Public sector banks offer stability with moderate returns. Union Bank of India leads at 6.60% for a 3-year FD, followed by Bank of Baroda (6.50%), PNB (6.40%), and State Bank of India (6.30%).

Impact: This trend offers investors better returns on safe investments. Savers can choose based on risk tolerance: higher yields from SFBs (within DICGC limits) or greater stability from private/public banks. Rising rates make FDs attractive for predictable income. Impact Rating: 6/10

Difficult Terms: Fixed Deposit (FD): Deposit money for a fixed period to earn interest. Small Finance Bank (SFB): Bank for unserved/underserved segments. DICGC: Insures bank deposits up to Rs 5 lakh. Principal: Original deposit amount. Maturity Amount: Total amount at period end. Private Sector Banks: Privately owned banks. Public Sector Banks: Government-owned banks.