Banks have been increasing fixed deposit (FD) interest rates since May 2022. And with the Reserve Bank of India (RBI) raising the repo rate by 0.5% to 5.9% in its latest monetary policy meeting, banks are expected to hike FD interest rates further.

The main concern of any investor, especially risk averse investors, is will their investment generate inflation beating returns. In India, inflation is at 7% as of now. So, one must plan their investment considering the inflation rate to be able to balance the expenses and returns. Here are some banks offering FD interest rates that are above the current inflation rate. Note that below rates are for amounts below Rs 2crore.

Banks offering over 7% for 3 year tenure

Banks offering over 7% on 5 year FD

Banks offer higher interest to senior citizens
According to the SBI website, “The rate applicable to all Senior Citizens and SBI Pensioners of age 60 years and above will be 0.50% above the rate payable for all tenors to resident Indian senior citizens i.e. SBI resident Indian Senior Citizen Pensioners will get both the benefits of Staff (1%) and resident Indian Senior Citizens (0.50%).”

According to the website, “The Senior citizens of age 60 years and up to 80 years shall get an additional rate of interest of 50 bps over applicable card rates for a period up to 5years and 80bps for a period above 5 years on domestic deposits of less than Rs. 2 Crore. In case of staff members as well as retired staff members who are also Senior Citizens, maximum rate of interest to be allowed over applicable card rate shall be 150 bps for a period up to 5 years and 180bps for period above 5 year ..

“Further, Super Senior Citizens of age above 80 years shall get additional rate of interest of 80bps over applicable card rate across all maturity buckets. In case of staff members as well as retired staff members who are also Super Senior Citizens, maximum rate of interest to be allowed over applicable card rate shall be 180 bps over applicable card rate across all maturity buckets,” as per the website.

Tax on FD
Senior citizens are free from paying tax on fixed deposits up to Rs. 50,000 annually. This means that up to Rs. 50,000 in FD interest received over a financial year is not subject to taxation for senior citizens.