Fixed Deposit (FD) Rates Guide: Maximizing Your Guaranteed Returns
In the current financial climate of 2026, Fixed Deposits remain a cornerstone of a stable portfolio. At ArthVeda, we track the shifting interest rate cycles to help you lock in the highest possible yields before rates cool down.
1. Current FD Interest Rate Landscape (February 2026)
Interest rates vary significantly based on the type of bank and the duration (tenure) of the deposit. Currently, Small Finance Banks continue to offer the most competitive rates to attract capital.
| Bank Category | Average Interest Range | Best For |
| Small Finance Banks | 7.50% – 9.10% | Investors seeking maximum yield. |
| Private Sector Banks | 6.50% – 7.50% | Balance of high service and decent returns. |
| Public Sector (PSU) Banks | 6.00% – 7.10% | Maximum perceived safety and stability. |
2. Top Performers: High-Yield FD Rates
For readers looking for the best “Fixed Income” options, these banks are currently leading the market:
- Unity Small Finance Bank: Offering up to 9.00% – 9.10% on specific tenures (e.g., 1001 days).
- Equitas & AU Small Finance Bank: Consistently offering 7.75% – 8.25% for senior citizens.
- IDFC First Bank: Competitive rates around 7.25% – 7.75% with the benefit of monthly interest payouts.
- HDFC & ICICI Bank: Leading private banks offering special “Limited Period” tenures (like 400 or 600 days) with rates touching 7.10% – 7.25%.
3. The “Special Tenure” Strategy
Banks often release “Special Vouchers” or “Limited Time Tenures” that offer higher interest than standard 1-year or 2-year buckets.
- The Odd-Day Benefit: Always look for tenures like 444 days, 666 days, or 999 days. These are designed to help banks manage liquidity and almost always carry a 0.25% to 0.50% premium over regular durations.
4. Senior Citizen Benefits
If you are investing on behalf of a parent or are over 60 yourself, you are entitled to the Senior Citizen Privilege.
- Additional Yield: Most Indian banks offer an extra 0.50% interest.
- Super Senior Citizens: Some banks offer an additional 0.75% to 0.80% for those above 80 years of age.
5. ArthVeda Checklist: Before You Lock Your Money
- Inflation vs. Returns: Ensure the “Real Rate of Return” (Interest Rate minus Inflation) is positive. If inflation is 5% and your FD is 7%, your real growth is 2%.
- Compounding Frequency: Ask if the interest is Quarterly Compounded. Quarterly compounding results in a higher “Effective Yield” compared to simple interest.
- Premature Withdrawal Policy: Some high-interest FDs come with a “Non-Callable” clause, meaning you cannot withdraw the money before maturity. Ensure you choose “Callable” FDs for emergency funds.
- Taxation (TDS): Remember that FD interest is fully taxable as per your income tax slab. Use Form 15G/15H to prevent TDS if your total income is below the taxable limit.
Closing Insight
“Interest rate cycles are like seasons; they don’t last forever. If you see a rate above 8% from a reputable bank in 2026, it is often a wise move to lock in a portion of your capital for a 2-3 year horizon.”
Based on the current rates for February 2026, here is a comparison of five major banks for a 1-year tenure and a 3-year tenure for a regular resident individual (non-senior citizen).
FD Interest Rate Comparison (February 2026)
| Bank | 1-Year Rate (% p.a.) | 3-Year Rate (% p.a.) | Highest Available Rate (Special Schemes) |
| SBI | 6.25% | 6.30% | 6.60% (Amrit Vrishti – 444 Days) |
| HDFC Bank | 6.25% | 6.45% | 6.45% (18 to 35 months) |
| ICICI Bank | 6.25% | 6.45% | 6.50% (3 to 10 years) |
| Axis Bank | 6.25% | 6.45% | 6.45% (15 months to 5 years) |
| Kotak Mahindra | 6.70% | 7.00% | 7.30% (391 days to < 23 months) |
Key Takeaways for Your Investment:
- Best Returns: Among these five, Kotak Mahindra Bank is currently leading with significantly higher rates for both short and medium-term tenures.
- Special Schemes: If you are looking for the best “bang for your buck” at a government bank like SBI, their Amrit Vrishti (444 days) scheme at 6.60% is better than their standard 1-year or 3-year options.
- Small Finance Bank Alternative: While you asked for specific banks, it’s worth noting that Small Finance Banks (like Unity or Jana) are currently offering rates as high as 8.20% – 8.60% if you are comfortable with a slightly different risk profile.
Maturity Value Example
If you were to invest ₹1,00,000 for 1 year:
- At SBI (6.25%), your maturity value would be approximately ₹1,06,398.
- At Kotak Mahindra (6.70%), your maturity value would be approximately ₹1,06,871.
Note: Maturity values are calculated based on quarterly compounding, which is standard for most Indian banks.