The Smart Investor’s Guide to the Best Fixed Deposit Interest Rates in 2023

Are you looking for a risk-free way to invest your money? Look no further than a fixed deposit (FD) account. FDs pay higher interest rates than savings accounts and are an excellent choice for those looking for a consistent return on their investment. 

Whether you’re a first-time investor or a seasoned investor looking for competitive rates – this blog will help you get the best interest on a fixed deposit. 

So let’s dive right in to look at the best FD interest rates available in India in 2023

What are Fixed Deposits?

Fixed deposits (FDs) are a popular investment vehicle in India due to their security and predictability. When you make a fixed deposit, you are lending money to a bank or financial institution for a set period, which can range from seven days to ten years.

In exchange, the bank will pay you a fixed interest rate that is usually higher than the rate offered on savings accounts.

There are several types of fixed deposit accounts available in India:

  1. Regular Fixed Deposit Account: These are the traditional fixed deposit accounts that allow individuals to deposit a lump sum of money at a fixed interest rate for a set time ranging from 7 days to 10 years.
  2. Tax-saving Fixed Deposit Account:  These come with a 5-year lock-in period that provides tax benefits under Section 80C of the Income Tax Act.
  3. Short-term Fixed Deposit Account: These are held for a shorter period, usually less than a year. They pay more interest than savings accounts but less than long-term fixed deposits.
  4. Cumulative Fixed Deposit: For this FD account, the interest is added to the principal amount at the end of each quarter and the final maturity amount is paid at the term’s end.
  5. Recurring deposit: It is a type of fixed deposit in which an individual can invest a set amount of money at regular intervals, usually monthly, for a set tenure.
  6. Flexi Fixed Deposit: In a Flexi fixed deposit the depositor can withdraw a portion of the deposit amount before the maturity date without breaking the deposit or incurring any penalties.
  7. Senior Citizen Fixed Deposit: These accounts are specifically designed for senior citizens and offer higher interest rates than regular fixed deposit accounts.
  8. NRE (Non-Resident External) Fixed Deposit: NRE fixed deposit accounts are available to Non-Resident Indians (NRIs) who wish to park their foreign income in India.

Now, let’s take a look at the prevailing FD rates in India in 2023. 

Best Bank Fixed Deposit Rates In India in 2023

Here are a few banks that give the best interest on fixed deposits.

Best Bank FD Rates for Public Sector Banks

Public Sector BanksFor one year3-year period5 years
SBI Bank6.756.256.25
UCO Bank6.756.306.10
Bank of Baroda6.756.756.25
Punjab National Bank6.756.756.50
Bank of Maharashtra
Bank of India6.006.506.00
Canara Bank6.756.506.50
Indian Overseas Bank6.406.506.50
Bank of India6.006.506.00
Central Bank of India6.756.006.00

Best Bank Fixed Deposit Interest Rates for Private Sector Banks

Private Sector BanksFor one year3-year period5 years
IDFC First Bank6.757.507.00
IDBI Bank6.756.256.25
HDFC Bank6.507.007.00
ICICI Bank 6.607.007.00
Axis Bank6.757.007.00
IndusInd Bank7.007.507.25
RBL Bank7.007.007.00
Yes Bank7.007.007.00
DCB Bank7.257.857.60
Karnataka Bank6.805.755.75
Kotak Mahindra Bank6.756.506.20

Best Bank Fixed Deposit Rates for Tax Saving FDs

Banks Normal RatesSenior Citizen Rates
Axis Bank7.00%7.75%
Bank of Maharashtra5.75%6.25%
HDFC Bank7.00%7.50%
ICICI Bank7.00%7.50%
IndusInd Bank6.75%7.50%
Bank of Maharashtra5.75%6.25%
Yes Bank7.00%
IDFC First Bank7.00%7.50%
IDBI Bank6.25%7.00%
Punjab National Bank6.50%7.00%
Suryoday Small Finance 6.75%7.25%
Jammu & Kashmir Bank6.50%7.00%
Union Bank of India6.70%7.20%

Best Fixed Deposit Interest Rates of NBFCs

NBFCsNormal RatesSenior Citizen Rates
Utkarsh Small Finance FD8.00%8.75%
Fincare Small Finance Bank FD 8.00%8.50%
Jana Small Finance Bank FD7.55%8.50%
Mahindra Finance FD7.50%7.55%
Sundaram Finance FD7.30%7.80%

Best FD Interest Rates of Foreign Banks

Foreign BanksFor 1 – 2 yearsFor 3 – 5 yearsFor 5 – 10 years 
Standard Chartered 6.15 – 6.25% 6.10% 6.10% 
Deutsche Bank6.50% 7.00% – 7.25% 7.50% 
Citi Bank7.25%3.50%
DBS Bank6.00% – 6.50% 6.25% 6.25% 
Barclays Bank5.86% to 5.93% 5.93% 5.93% 
J.P. Morgan Chase 4.89% 4.89% 4.89% 

Now, let’s explore some of the advantages and disadvantages associated with fixed deposit accounts. 

Advantages of fixed deposits:

  1. Safety: Because they are offered by banks and financial institutions regulated by the Reserve Bank of India, FDs are considered a safe investment option.
  2. Guaranteed Returns: Fixed deposit interest rates are guaranteed, which means you know exactly how much you will earn on your investment.
  3. Predictability: FDs provide a fixed rate of return, making budgeting and financial planning simple.
  4. Liquidity: Most banks permit early withdrawal of FDs, though the interest rate offered is lower than the initial rate.

Disadvantages of fixed deposits:

  1. Low-interest rates: The interest rate on a fixed deposit may be lower than the interest rate on other investment options such as stocks, mutual funds, and so on.
  2. Inflexibility: You cannot withdraw money from a fixed deposit before the maturity date without incurring a penalty.
  3. Inflation: Fixed-deposit returns may not be sufficient to keep up with inflation, which means your money’s purchasing power may decline over time.
  4. Lack of diversification: Having all of your money in a single fixed deposit account increases the risk of losing it if the bank runs into financial difficulties.


Q1. Is investing in fixed deposits a good investment?

Fixed deposits (FDs) are low-risk, low-return investments that provide a guaranteed return for a set period. They should be opted for if you do not want to take on much risk, but their returns may be lower than those of other investment options.

Q2. What is the minimum and maximum time period for an FD?

A fixed deposit typically has a minimum period of 7 days and a maximum period of up to 10 years. Certain types of deposits, such as senior citizen fixed deposits, may be eligible for longer terms from some banks.

Q3. Is FD better than gold?

FDs provide a guaranteed return with little risk, whereas gold provides a safe haven and a hedge against currency depreciation and price volatility. The choice between the two is determined by your investment objectives and risk tolerance.

Q4. Is FD interest income tax-free?

The interest on FD is taxable. If your total interest income from all FDs with a bank in a year is less than Rs 40,000, the bank cannot deduct any TDS. In the case of a senior citizen aged 60 and above, the limit is Rs 50,000.

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