Fixed deposit customers — particularly senior citizens — enjoyed high returns on their term deposits until early 2025. Banks and non-bank lenders were competing fiercely to attract deposits, and even some PSU banks were offering more than 8% to senior citizens on select tenures. Non-banking financial companies offered even higher rates.
Fast forward to November 2025, the scenario has changed. With the RBI cutting rates consecutively since February 2025, term deposit rates across both banks and NBFCs have softened.
A turning point: RBI rate cuts end the high-FD regime
With inflation easing and growth stabilising, the RBI has reduced the repo rate by a total of 100 basis points (1%) this year. For banks, this was the signal they were waiting for. As lending rates declined, the urgency to mobilise deposits also reduced — and the inevitable happened: FD rates began inching down after staying elevated for years.
For senior citizens — who relied on 7.5–8.5% fixed deposits — the shift is unmistakable. Many now find their maturing FDs being renewed at lower rates, raising an important question: Where can senior citizens still get the best 3-year FD returns?
Before we get there, it helps to understand the types of FDs available.
Although FDs look simple on the surface, they come in multiple variants that suit different financial needs — especially for retirees.
Bank Fixed Deposits
These are the traditional FDs offered by commercial banks. Key features include:
-Fixed interest rate for the chosen tenure.
-Insurance cover of up to Rs 5 lakh per depositor via DICGC.
-Senior citizen extra interest, typically 0.25–0.75% above regular rates.
-Premature withdrawal usually allowed with a small penalty.
Post Office Time Deposits
These are government-backed and very popular among conservative savers:
-Tenures of 1, 2, 3, and 5 years.
-Backed by the sovereign guarantee, making them extremely safe.
-Interest reviewed every quarter by the Finance Ministry.
-No special senior citizen rates, unlike banks.
Corporate Fixed Deposits (Company FDs)
These are FDs issued by NBFCs, housing finance companies, and corporates:
-Offer higher interest rates than bank FDs.
-Don’t have DICGC insurance; safety depends on credit rating.
-Premature withdrawal rules vary and can be restrictive.
-Popular among senior citizens because of the higher yield.
Bank FDs vs corporate FDs: What should senior citizens prefer?
With bank FD rates trending down due to RBI’s 100-bps rate cut, many retirees are eyeing corporate FDs offering 8–9% interest. But the choice isn’t only about returns. For many the safety comes first, and despite moderate returns, they still prefer banks. In bank FDs, the deposit is insured up to Rs 5 lakh. Additionally, since public-sector and top private banks carry extremely low default risk, there is peace of mind for customers.
Corporate FDs: Safety varies by issuer. Experts suggest that customers should always choose AAA or AA+ rated companies.
FD returns: Banks Vs Corporates
Top 5 banks offering highest FD interest rates (1 to 3 years) — ranked from highest to lowest returns:
| Bank Name | Interest Rate (General Public) | Interest Rate (Senior Citizens) |
| YES Bank | 6.65% – 7.00% | 7.15% – 7.75% |
| RBL Bank | 7.00% – 7.20% | 7.50% – 7.70% |
| Bandhan Bank | 7.00% – 7.20% | 7.50% – 7.70% |
| IndusInd Bank | 6.75% – 7.00% | 7.25% – 7.50% |
| IDFC FIRST Bank | 6.30% – 7.00% | 6.80% – 7.50% |
(Source: BankBazaar)
Corporate FDs still offer 7.35%–9.5% to senior citizens
| Compay | Rate (Regular) | Rate (Senior Citizens) |
| Muthoot Capital Services | 8.95% | 9.20% |
| Shriram Finance | 7.60% | 8.10% |
| ICICI Home Finance | 7.10% | 7.45% |
| Sundaram Home Finance | 8.15% | 8.65% |
| PNB Housing Finance | 7.10% | 7.35% |
| Note: Rates for cumulative retail deposits as advertised on the company’s website on Nov 11, 2025; Subject to change as per the company’s policies. Compiled by BankBazaar.com | ||
Taxation:
-Interest from both bank and corporate FDs is fully taxable as per slab.
-TDS applies above Rs 40,000 (Rs 50,000 for senior citizens).
Summing up…
Corporate FDs offer higher yield but need careful issuer selection. A smart strategy is to ladder FDs across banks and corporates to balance safety, returns, and liquidity — ensuring retirement income doesn’t get hit by the new low-rate regime.