Senior citizens looking for FD options? These banks offer interest rate of up to 9.1%

Senior citizens can earn up to 9.1% interest rate on fixed deposits for a five-year tenure on a capital of up to Rs 3 crore.

Here is a list of banks where individuals aged 60 and above can consider opening a fixed deposit, offering interest rates of up to 9.1% as of May 21, 2025, as per the Paisabazaar.com.

Suryoday Small Finance Bank: up to 9.1%
Unity Small Finance Bank: up to 8.65%.
NorthEast Small Finance Bank: up to 8.5%
Utkarsh Small Finance Bank: up to 8.25%
Jana Small Finance Bank: up to 8.2%

However, financial experts urge caution when investing in small finance banks as they have potentially higher risk as compared to commercial banks. Although all deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5 lakh, the business models of these banks differ from scheduled commercial banks, potentially exposing depositors to higher risks according to ET.
How to tackle TDS, for senior citizens
Banks are required to deduct Tax Deducted at Source (TDS) if the total interest earned on FDs in a financial year exceeds Rs 1 lakh. However, TDS is not an additional tax and can either be refunded or adjusted when filing your Income Tax Return (ITR).

For example, under the new tax regime for FY 2025-26, a senior citizen earning Rs 11 lakh annually won’t have to pay any income tax, thanks to the Section 87A tax rebate applicable for incomes up to Rs 12 lakh. Despite this, banks will still deduct TDS once the interest income crosses the Rs 1 lakh threshold.

To avoid unnecessary TDS deductions in such cases, eligible senior citizens can submit Form 15H to their banks, declaring that their total income is below the taxable limit.