FD Interest Rate Hike: Best 7.75% Offers for Senior Citizens

FD: Fixed deposit (FD) investors have experienced a decline in interest rates over the last year. After the Reserve Bank of India reduced the repo rate by 125 basis points in 2025, banks and non-bank financial companies (NBFCs) gradually lowered their deposit rates over different time frames.

This situation has raised concerns for many senior citizens who depend on FD income for their monthly expenses. However, despite these rate reductions, several banks are still providing attractive returns of up to 7.75% for senior citizens as of February 2026. Let’s explore where senior citizens can still secure higher interest rates.

Top 5 private sector banks with the best FD rates for senior citizens

Yes Bank- 7.75%

Bandhan Bank- 7.70%

RBL Bank-7.70%

IDFC First Bank- 7.50%

IndusInd Bank- 7.50%

Among private lenders, Yes Bank currently offers the top rate for senior citizens at 7.75%. Bandhan Bank and RBL Bank follow closely with rates of 7.70%. In general, private banks are providing a notable advantage over public sector banks in this current cycle.

Top 5 public sector banks with the best FD rates for senior citizens

Bank of Baroda- 7%

Punjab National Bank- 6.90%

Central Bank of India- 6.75%

Bank of Maharashtra- 6.70%

Union Bank of India- 6.70%

Among public sector banks, Bank of Baroda stands out with a rate of 7.00%, followed by Punjab National Bank at 6.90%. While PSU banks may offer slightly lower rates compared to private banks, many senior citizens favor them for their stability and dependability.

Private vs PSU: What’s the difference?

At present, there is a 0.75 percentage point gap (7.75% vs. 7.00%) between the highest rates provided by private and public sector banks. For a one-year FD of Rs 10 lakh, this difference could result in a pre-tax annual interest variation of approximately Rs 7,500—an important consideration for retirees.

One important factor that depositors often overlook is insurance coverage. All bank deposits are insured up to Rs 5 lakh per customer per bank under the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India. This limit of Rs 5 lakh includes the principal amount and accrued interest. If you have more than Rs 5 lakh to invest, it may be wise to split the deposits across multiple banks or maintain them in different banks to maximize insurance coverage.

How should senior citizens invest in FDs now?

Even though rates have come down from their peak, FDs remain a preferred option for retirees because they offer predictable income and capital protection. Here are some things to keep in mind:

Compare rates carefully based on tenure

The highest rate is usually quoted for a specific tenure (e.g., 444 days or 555 days). Don’t assume that all tenures offer the same returns.Check penalty for premature withdrawal. Some banks charge a penalty of 0.5%-1% for breaking an FD before maturity. Consider the option of paying interest monthly. Senior citizens who need regular income can choose the monthly and quarterly payment option.

Take care of taxes

FD interest is fully taxable. If your total income is below the taxable limit, submit Form 15H to avoid TDS deduction.

Don’t blindly follow the rates. While private banks are offering higher returns, depositors should assess their comfort level and choose from different types of banks. Avoid depositing large sums of money in a single bank, exceeding the insurance limit.