Last year, the Reserve Bank of India (RBI) cut the repo rate by a total of 125 basis points, bringing it down to 5.25% — the lowest level since June 2022. While this decision made home loans, personal loans, and other loans cheaper, returns for those investing in fixed deposits (FDs) gradually declined.
There was a time when even major banks were offering FD interest rates above 8%, but as of early 2026, interest rates are at multi-year lows. Despite this, it’s a relief that some of the country’s largest banks are still offering 7% or more interest rates to senior citizens.
In this article, we compare the 5-year fixed deposit rates of the country’s top 5 banks – 3 PSU banks and 2 private sector banks – to understand which is the best option for general customers and senior citizens.
This FD rates data is taken from the BankBazaar website, updated as of 5 December 2025. The RBI had cut the repo rate by 25 bps in its last bi-monthly monetary policy on the same day.
5-year FD rates: Top 5 banks comparison
State Bank of India (SBI) 5-year FDs:
General customers: 6.05% per annum
Senior citizens: 7.05% per annum
Punjab National Bank (PNB)’s 5-year FD rates:
General customers: 6.00% per annum
Senior citizens: 6.80% per annum
Bank of Baroda’s 5-year Fixed Deposit:
General customers: 6.00% per annum
Senior citizens: 7.00% per annum
HDFC Bank’s 5-year FD rates:
General customers: 6.15% per annum
Senior citizens: 6.65% per annum
ICICI Bank FD 5-year rates:
General customers: 6.60% per annum
Senior citizens: 7.10% per annum
(Data: BankBazaar)
In this comparison, ICICI Bank offers the highest rate for both senior citizens and general customers.
Small finance banks vs large banks: Higher interest, but also risky?
When it comes to FD rates, Small Finance Banks (SFBs) often offer higher interest rates than larger banks. Even in 2026, some SFBs are offering interest rates above 8% to senior citizens to attract deposits.
Small finance banks offer higher interest rates because they need to expand their deposit base and lend to comparatively riskier borrower segments. One of the reasons is they have to compete with larger, more established banks.
DICGC insurance and safety: Why are large banks considered safer?
Whether large banks or small finance banks, DICGC insurance applies to both. Under this every depositor in each bank is protected up to Rs 5 lakh (principal + interest).
Nevertheless, large banks are considered safer for FD investors. The reasons for this are:
RBI Regulation: RBI’s strict oversight of all scheduled banks
DICGC Coverage: Deposit insurance by an RBI subsidiary
Financial Stability: Large banks have strong balance sheets and market reputation
Government Banking: Indirect government support for Systemically Important Banks (D-SIBs).
According to experts, if the investment amount is large, diversification is a better strategy—that is, making FDs in different banks within the DICGC limit of Rs 5 lakh.
Summing up…
In 2026, FD rates are lower than before, but 5-year FDs still offer returns of 6%–7.1%. ICICI Bank currently offers the highest interest rates, while SBI and Bank of Baroda remain strong options for senior citizens. Don’t compromise on safety in pursuit of higher interest rates; be sure to check the DICGC limit and the bank’s stability.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a qualified professional before making investment decisions.