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5 Best Fixed Deposits For Senior Citizens


Fixed Deposit (FD) is among the most traditional financial instrument for senior citizens in order to get assured returns against their investment. They tend to invest a substantial portion of their money in bank FDs because compared to investing in mutual funds or stocks, the principal investment amount is relatively secure and the returns from FDs are also guaranteed. Let's welcome some aspects of fixed deposits for senior citizens.


What senior citizens are required to open a fixed deposit account?

Senior citizens generally open an FD account with the same bank in which they already have a current savings account. In case they don't have a current savings account with a bank, the bank asks to complete the KYC process to a senior citizen at which he or she is willing to open an FD account. The bank will request them to submit KYC form duly attached with the documents such as a self-attested copy of identity (ID) proof such as PAN or Aadhaar, address proof such as Voter ID, passport etc. and passport size photographs. As the bank official will ask you for authentication purposes, don't forget to take your original documents. Bank executives will check your age from the documents submitted by you in order to know your eligibility to invest in FDs as a senior citizen. Banks usually follow the principle of a senior citizen as set out in the Income Tax Act.

5 Best Fixed Deposits For Senior Citizens

Top 5 Banks Offering Higher Interest Rates On FDs For Senior Citizens Across Different Tenures

Bank NameInterest Rate for tenure of 1 year
IndusInd Bank7.50%
RBL Bank7.35%
DCB Bank7.00%
Ujjivan Small Finance Bank7.00%
Bandhan Bank6.50%

Bank NameInterest rate for tenure of 2 years
IndusInd Bank7.50%
RBL Bank7.35%
DCB Bank7.30%
AU Small Finance Bank7.00%
Ujjivan Small Finance Bank7.00%

Bank NameInterest Rate for tenure of 3 years
RBL Bank7.65%
DCB Bank7.45%
AU Small Finance Bank7.25%
IndusInd Bank7.25%
Ujjivan Small Finance Bank6.55%

Bank NameInterest rate for tenure of 5 years
DCB Bank7.45%
IndusInd Bank7.25%
AU Small Finance Bank7.00%
RBL Bank7.00%
Bandhan Bank6.50%

Additional benefit for senior citizens

In contrast to the general public, senior citizens are generally treated with higher interest rates of 0.50 per cent. Senior citizens can opt whether to receive monthly interest pay-outs (non-cumulative option) to cover their expenses or, together with the principal amount, at the time of maturity (cumulative). Usually, banks provide FDs which compound interest on a monthly, quarterly, semi-annual or annual basis.


Top 10 Banks Offering Higher Interest Rates On 3 Year FDs For Senior CitizensTop 10 Banks Offering Higher Interest Rates On 3 Year FDs For Senior Citizens


To open an FD account for a senior citizen, banks have pre-defined minimum and maximum span. Currently, for a minimum of 7 days and a maximum of 10 years, one can invest in an FD. The tenure can be selected according to your needs within this period.

Minimum and maximum investment threshold

The minimum amount allowed to be deposited in an FD varies across banks. However, there is no restriction to the maximum amount you can invest in an FD as a senior citizen.

5 Best Fixed Deposits For Senior Citizens

Taxation for senior citizens

As per the recently introduced section 80TTB of the Income Tax Act, returns earned up to Rs 50,000 on deposits maintained with banks, cooperative banks or post offices are exempted from tax. This tax relief operates as follows: a senior citizen can claim the deduction of interest income received by these institutions of up to Rs 50,000 as a pre-tax deduction from gross total income. In contrast, no TDS will be deducted from interest payments made in a particular financial year of up to Rs 50,000. A senior citizen can submit Form-15H to the bank in order to avoid TDS deduction.

2 Best Investment Options For Senior Citizens 2 Best Investment Options For Senior Citizens

Premature withdrawal facility

FDs generally provide a premature withdrawal facility which can enable you to fulfill your emergency needs. However, the bank can levy a penalty for making a premature withdrawal from FDs. The penalty amount that will be deducted from your FD balance differs across banks. Some banks do not charge a penalty on premature withdrawals presently. In addition, without a premature withdrawal facility, some banks also provide FDs. It is also prudent to verify the regulations concerning the same matter.

Nomination facility

Nomination facility on FDs is also offered to senior citizens. It is vital that you specify the nominee in a transparent and correct way while opening an FD account, which allows your legitimate heirs to claim the money in a hassle-free manner. A specific form, known as Form DA1, has to be fulfilled and submitted to the bank during nomination.

5 Best Fixed Deposits For Senior Citizens

Loan facility

To get a loan, senior citizens can use their FD as collateral. A certain percentage of the principal deposit which varies across banks is usually the highest loan sanctioned to the holder of FD.

Auto-renewal option

Banks, currently, provide an automatic renewal option at the time of maturity. This ensures that the FD will automatically be renewed on the maturity date if no instructions are provided at the time of account opening. For the same duration for which it was initially placed at the interest rate existing on the date of auto-renewal, the auto-renewal of the FD is the same. If you want to earn maturity profits in your savings account, you may be asked to visit the bank branch physically on the maturity date if you are not specified directives to do so in your form while opening an FD account.

Read more about: fd fixed deposits investment fds
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