FD Interest Rates July 2025: The recent cut in interest rates on fixed deposits (FDs) by banks is causing special problems to senior citizens, as most of their savings are in FDs.
However, it is a matter of relief that some banks are still offering attractive interest rates of up to 8.8% on FDs to senior citizens.
Public Sector Banks-
If you are thinking of making a fixed deposit (FD) in government banks, then it is a good option for senior citizens, as they get high interest rates. Government banks are considered reliable for stability and security, although their interest rates may be slightly lower than those of private or small finance banks. These banks are better for those who want security and assured returns.
Banks- Maximum Interest Rate (%)-
Punjab & Sind Bank – 7.55%
Bank of India – 7.50%
Central Bank of India – 7.50%
Indian Overseas Bank – 7.45%
Indian Bank – 7.40%
Private Sector Banks-
Private sector banks usually offer slightly higher interest rates than government banks, and sometimes also offer flexible tenure options. Senior citizens can get up to 7.90% interest here, especially in some options like SBM Bank.
Banks – Maximum Interest Rate (%)-
SBM Bank – 8.55%
Bandhan Bank – 7.90%
CSB Bank – 7.90%
DCB Bank – 7.90%
RBL Bank – 7.80%
Small Finance Banks-
If you can take a little risk for higher returns, then small finance banks can be a great option. These banks are offering the highest interest rates in the market, especially for senior citizens. Such as Suryoday Bank 8.80% and Utkarsh Bank 8.75%.
Bank – Maximum Interest Rate (%)
Suryaodaya Small Finance Bank – 8.80%
Utkarsh Small Finance Bank – 8.75%
Shivalik Small Finance Bank – 8.55%
Slice Small Finance Bank – 8.50%
Fincare Small Finance Bank – 8.25%
RBI reduced repo rate-
So far in 2025, the Reserve Bank of India has cut the repo rate by a total of 100 basis points (1%). When the RBI reduces the repo rate, that is, gives cheap loans to banks, then banks make the loans cheaper. But at the same time, they also reduce the interest on FD, because now they do not need to raise money from customers at an expensive interest.
Relief to senior citizens in TDS too-
In the 2025 budget, senior citizens have a significant exemption from TDS. From April 1, 2025, banks will have to deduct TDS on fixed deposits (FDs) only if the annual interest exceeds Rs 1 lakh. Earlier this limit was Rs 50,000. Additionally, if the total income of a senior citizen is less than Rs 12 lakh from FY 2026, they can completely avoid TDS by submitting Form 15H even if their interest exceeds Rs 1 lakh. This change will reduce the financial burden for senior citizens.
What should investors do?
Despite the reduction in repo rate, fixed deposits (FDs) are still a safe and beneficial investment for senior citizens. Banks may also change the rates in the future, so consider the current interest rates and tenure while booking an FD in July 2025. Do not forget to compare the rates of all banks before investing.