If you're looking to invest your money in a Fixed Deposit (FD) but want better returns than what traditional banks offer, Small Finance Banks (SFBs) are becoming an attractive option. While large banks like SBI typically offer FD interest rates ranging from 6.25% to 6.45%, several SFBs are providing higher returns—up to 7.77%.
Here’s a list of 7 Small Finance Banks offering some of the best FD interest rates in 2025:
1. Ujjivan Small Finance Bank
· Interest Rate for General Public: 7.75%
· Interest Rate for Senior Citizens: 8.25%
Ujjivan SFB is known for its competitive FD rates, making it a popular choice among investors. The bank offers a maximum return of 7.75% for general public and 8.25% for senior citizens.
2. Equitas Small Finance Bank
· Interest Rate for General Public: 7.50%
· Interest Rate for Senior Citizens: 7.75%
Equitas SFB also offers high FD rates, especially attractive to those looking to earn steady returns on their investments. The senior citizens' rate of 7.75% is one of the highest in the SFB segment.
3. Jana Small Finance Bank
· Interest Rate for General Public: 7.75%
· Interest Rate for Senior Citizens: 8.25%
Jana SFB offers great returns on fixed deposits, with up to 7.75% for the general public. Senior citizens can enjoy an even higher rate of 8.25%.
4. Suryoday Small Finance Bank
· Interest Rate for General Public: 7.60%
· Interest Rate for Senior Citizens: 8.10%
Suryoday SFB offers competitive FD rates, with 7.60% for the general public and 8.10% for senior citizens. This makes it a solid choice for those seeking higher returns with lower risk.
5. AU Small Finance Bank
· Interest Rate for General Public: 7.25%
· Interest Rate for Senior Citizens: 7.75%
AU Small Finance bank offers a decent return on FDs with rates up to 7.25% for general public. For senior citizens, the rate is 7.75%, offering a great opportunity to lock in higher returns for the long term.
6. Fincare Small Finance Bank
· Interest Rate for General Public: 7.50%
· Interest Rate for Senior Citizens: 7.75%
Fincare SFB’s FD rates are attractive, especially for those looking to earn around 7.50% as the general public rate. The senior citizen rate of 7.75% adds an additional incentive for retirees.
7. Shivalik Small Finance Bank
· Interest Rate for General Public: 7.10%
· Interest Rate for Senior Citizens: 7.60%
Shivalik Small Finance bank may not offer the highest rates, but their 7.10% return for general depositors is competitive. Senior citizens can benefit from 7.60% returns.
Why Small Finance Banks (SFBs) are Attractive for FDs
1. Higher Interest Rates: As seen, SFBs offer higher FD rates compared to traditional banks, which makes them an appealing choice for investors who want better returns on their fixed deposits.
2. Security: Small Finance Banks are regulated by the Reserve bank of India (RBI), which ensures the safety and credibility of their operations. In case of any default, deposits are covered under the RBI’s Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per account holder.
3. Diversified Portfolio: Many of these banks also have a strong presence in rural and semi-urban areas, which means they might offer relatively stable and growing financial products backed by a diverse customer base.
4. Attractive for Senior Citizens: Most SFBs offer special interest rates for senior citizens, making them an excellent option for retirees seeking to maximize their returns.
Things to Keep in Mind Before Investing
· Lock-in Period: Check the lock-in period for FDs, as most SFBs offer flexible tenures ranging from 1 year to 5 years.
· Taxation: Interest earned on FDs is taxable. Be sure to consider the tax implications, and if necessary, invest in tax-saving fixed deposits to avail benefits under Section 80C.
· Premature Withdrawal Penalty: Some SFBs may levy a penalty if you decide to withdraw the FD prematurely. Make sure to understand the penalty structure before committing your funds.
Conclusion: Which bank Should You Choose?
If you're aiming for the highest possible returns on your Fixed Deposits, Ujjivan Small Finance Bank and Jana Small Finance Bank stand out with 7.75% returns for general depositors. For senior citizens, Jana SFB offers a top rate of 8.25%, making it an excellent choice.
Each of the 7 banks listed above offers competitive interest rates, so your choice should depend on factors like your investment timeline, your age, and the bank's reputation.
With FD rates remaining favorable in 2025, Small Finance Banks present an attractive avenue for growing your savings. Make sure to compare the terms before locking your money into a fixed deposit.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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