The Reserve Bank of India (RBI) has cut the repo rate by a total of 100 basis points (bps) in three monetary policy reviews since February 2025. There was a cut of 25-25 bps in February and April and 50 bps in the June monetary policy review. While this has brought relief to borrowers, it has proved to be a loss for fixed deposit customers as banks and non-bank lenders have cut interest rates on their fixed deposits multiple times since February 2025.
But amid this decline, there are some small finance banks that are still offering attractive interest rates of up to 9%, especially for senior citizens. But before comparing FD returns of small finance banks with those of bigger peers, we must tell you that large banks provide do give lower returns but provide a sense of security to customers for various reasons.
So, why do small banks pay higher FD interest?
Small finance banks often offer higher interest rates than big banks to increase their deposit base. These banks usually offer higher interest rates to add new customers and stay competitive. However, it is important to understand some risks before investing in these banks.
Risks and security – Small finance banks Vs large banks
The high interest on FDs in small finance banks is attractive, but while investing in them, things like the credit rating of the bank, capital position and RBI monitoring should be kept in mind. The good thing is that every depositor gets a maximum insurance cover of up to ₹ 5 lakh on the amount deposited in all scheduled banks through DICGC, a subsidiary of RBI. This includes FD, savings account, current account and RD.
Now let us know the interest rates and features of 10 major small finance banks as per the update till June 11, 2025:
- Slice Small Finance Bank
Slice Small Finance Bank, formerly known as North East Small Finance Bank, offers interest ranging from 3.50% to 9.00% on FDs ranging from 7 days to 120 months. Senior citizens also get 0.50% additional interest on these. The highest rate of the bank is 9.00% which is the highest in the market. 1 year FD is getting 7.00% interest, 3 year 8.75% and 5 year FD is getting 8.00% interest.
- Unity Small Finance Bank
Unity Small Finance Bank offers the highest interest rate of 8.60% to its depositors. 1 year FD is getting 7.25% interest, 3 year 8.15% and 5 year 8.15% interest. Senior citizens are given an additional 0.50% interest.
- Suryoday Small Finance Bank
Suryoday Bank is offering up to 8.40% interest on FD. 1 year FD is getting 7.90% interest, 3 year 8.40% and 5 year 8.00% interest. Senior citizens get 0.40% more interest in this.
- Shivalik Small Finance Bank
This bank is giving 6.00% interest on 1 year FD, 7.50% on 3 years and 6.50% on 5 years. Its maximum rate is 8.30%. Senior citizens get additional 0.50% interest in all schemes.
- Utkarsh Small Finance Bank
Utkarsh Bank gives 6.25% interest on 1 year FD, 8.25% on 3 years and 7.75% on 5 year FD. Its highest rate is 8.25%. Senior citizens get 0.50% additional interest.
Also read: Senior citizens can still earn 9.1% FD rate – Just 2 days left to book this highest rate FD
- Jana Small Finance Bank
The maximum interest rate of Jana Bank is 8.20%. 7.50% interest is being given on 1 year FD, 8.05% on three years and 8.20% on 5 years. Senior citizens get an additional 0.50% interest benefit.
- Ujjivan Small Finance Bank
Ujjivan Bank offers 7.90% interest for both 1 and 3 years and 7.20% for 5 years. The maximum interest rate is 8.05% and senior citizens get 0.50% additional interest.
- Equitas Small Finance Bank
Equitas Bank offers a maximum interest rate of 8.05%. 1 year and 3 year FDs offer 7.90% interest and 5 year FDs offer 7.25% interest. Senior citizens get additional interest ranging from 0.50% to 0.60%.
- SBM Bank
SBM Bank, which is not a small finance bank but offers competitive rates, offers a maximum interest of 8.05%. 1 year FD is getting 7.50% interest, 3 years 7.30% and 5 years 7.75% interest. Senior citizens get 0.50% additional interest in this.
- DCB Bank
DCB Bank’s FD rates are somewhat stable. 1 year FD is getting 7.10% interest, 3 years 7.25% and 5 years 7.25% interest. Its maximum rate is 7.75% and senior citizens get additional 0.50% interest.
| Bank | Highest FD Rate (% p.a.) | 1-Year FD Rate (% p.a.) | 3-Year FD Rate (% p.a.) | 5-Year FD Rate (% p.a.) | Additional Rate for Senior Citizens (% p.a.) |
|---|
| Slice Small Finance Bank | 9.00 | 7.00 | 8.75 | 8.00 | 0.50 |
| Unity Small Finance Bank | 8.60 | 7.25 | 8.15 | 8.15 | 0.50 |
| Suryoday Small Finance Bank | 8.40 | 7.90 | 8.40 | 8.00 | 0.40 |
| Shivalik Small Finance Bank | 8.30 | 6.00 | 7.50 | 6.50 | 0.50 |
| Utkarsh Small Finance Bank | 8.25 | 6.25 | 8.25 | 7.75 | 0.50 |
| Jana Small Finance Bank | 8.20 | 7.50 | 8.05 | 8.20 | 0.50 |
| Ujjivan Small Finance Bank | 8.05 | 7.90 | 7.20 | 7.20 | 0.50 |
| Equitas Small Finance Bank | 8.05 | 7.90 | 7.75 | 7.25 | 0.50–0.60 |
| SBM Bank | 8.05 | 7.50 | 7.30 | 7.75 | 0.50 |
| DCB Bank | 7.75 | 7.10 | 7.25 | 7.25 | 0.50 |
(Source: PaisaBazaar)
Summing up…
In this era of repo rate cuts, while big banks are reducing rates on FDs, some small banks are still giving higher returns. These FD schemes may be attractive for senior citizens who want regular income, but it is important to check aspects like bank status and DICGC cover before investing.