Which FD will get the most return for a 3-year investment if you are a senior citizen?

If you are looking to invest your senior citizen fund for three years, read on to know about the best fixed deposit interest rates available to you.

Which FD will get the most return for a 3-year investment if you are a senior citizen

As the COVID-19 induced lockdown brought the country to a standstill earlier this year, RBI slashed the repo rates to ensure liquidity in the market. While loans got cheaper, the interest rates on deposits took a beating. Banks have reduced deposit interest rates during the year with even high-yield fixed deposit returns seeing a fall. 

Fixed deposits are a trusted form of savings and income for senior citizens because of the safety and yield it offers. As investors are getting worried looking at the revised interest income on their fixed deposit calculators, there are quite a few banks and financial institutions that are offering healthy fixed deposit interest rates.

Taking a 3-year investment period as a standard, here’s a look at some of the best fixed deposit interest rates available in India. We are also considering a deposit amount below Rs 2 crore for the sake of consistency. The interest rates and other relevant information are updated as of 12 November 2020. 

Public sector banks: Public sector banks generally enjoy more deposits compared to private banks and institutions. This is reflected in their deposit interest rates, which are by far the lowest in the market. State Bank of India is offering an interest of 5.8% per annum to senior citizens for a three-year fixed deposit. The same is offered by Bank of Baroda, while Canara Bank offers marginally higher FD interest rates at 5.85%. Punjab National Bank touches the 6% rate of interest for its senior citizen FD investors.

Related: How to select a safe investment for retirement  

Private sector banks: Most private sector banks are relatively new and don’t have the presence or customer base of PSU banks. However, private banks like Axis, HDFC, and ICICI Bank do have both. All three of these premier Indian private banks fall short of the 6% mark when it comes to bank FD interest rate. On three-year FDs for senior citizens, the interest rate offered by Axis is 5.9%, HDFC is 5.7% and ICICI is 5.65%. Federal Bank is offering 6% per annum, while Bandhan Bank is offering 6.5% for the same. Further upping the ante are private banks like DCB, RBL, and IndusInd. IndusInd Bank offers a 7.25% interest rate while both Development Credit Bank and the Ratnakar Bank is offering 7.45%.

Related: Five must-have investment instruments for retirement planning 

Small finance banks: Small finance banks often offer competitive interest rates on FD investment amounts to gain more customer base. Jana Small Finance Bank is offering 7.5% on the three-year FD, as is Fincare Small Finance Bank. Suryoday Small Finance Bank is offering an impressive 7.75%, which is equalled by Utkarsh Small Finance Bank.

Financial institutions: As we have seen, the rate of interest increases as we go from PSU banks to private banks, and thence to small finance banks. Financial institutions offer even more lucrative interest rates on FDs. Kerala Transport Development Finance Corporation offers 8.25% to senior citizens for 3-year deposits. This is bettered by Shriram City Finance, which offers around 8.5%.

Related: Tax Benefits after Retirement 

Understandably, the competition is extreme among financial institutions and small finance banks, while public sector banks and even private ones to an extent are conservative in their deposit interest rates. Investors can make a choice depending on their reliance on the bank or institution, and the interest rate that suits their need. 


Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas. 

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