Senior citizens should invest a part of their savings in fixed deposits that provide liquidity and ensure periodic interest income.
For senior citizens, interest rates on three-year FD have been fixed at up to 8 percent. Elderly people should invest a part of their savings in fixed deposits, which provide liquidity and ensure periodic interest income. Savings are useful for building an emergency fund. Although the interest on bank FDs is taxable, the lower tax slab for most senior citizens ensures that the tax liability is minimal or nil if other income is negligible.
The key parameter to identify these banks is the interest rates of the top 20 banks (as per their aggregate fixed deposit position reported to RBI as on March 31, 2022). Data on the websites of the respective banks as on October 20, 2023. Banks whose data was not available on their websites have not been considered. The data includes 3-year deposits of senior citizens (60-80 years) for amounts less than Rs 1 crore. The value is calculated on the basis of quarterly compounding of interest. The minimum investment amount may vary depending on the type of fixed deposit account.
- Yes Bank and IndusInd Bank offer 8 percent interest on three-year FD for senior citizens. Among private banks, it offers the best interest rates. An investment of Rs 1 lakh grows to Rs 1.27 lakh in three years.
- Bank of Baroda offers 7.75 percent interest on three-year FDs for senior citizens. Among public sector banks, it offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.26 lakh in three years.
- Axis Bank offers 7.60 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.25 lakh in three years.
- HDFC Bank, ICICI Bank and Punjab National Bank offers 7.50 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.25 lakh in three years.
- Canara Bank offers 7.30 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
- Bank of India offers 7.25 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
- Federal Bank offers 7.10 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
- The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, guarantees investments in fixed deposits of up to Rs 5 lakh.
