When it comes to fixed deposits, a higher interest rate than banks can be tempting but the extra return rarely comes without an additional layer of risk.
Small Finance Banks and corporate FDs often offer more attractive rates than traditional bank deposits, but investors need to look beyond the headline interest rate.
While Small Finance Bank FDs benefit from deposit insurance, corporate FDs carry a different risk profile. So, which option offers the better risk-return trade-off?
Here’s a detailed comparison of small finance bank FDs vs corporate FDs in terms of returns, risks and where investors should park their money.
Small finance bank FDs for non-senior citizens
| Banks | Highest interest rate slab | 1-year tenure (%) | 3-year tenure (%) | 5-year tenure (%) | 10-year tenure (%) | |
| % | Tenure | |||||
| AU Small Finance Bank | 7.40 | 30 months 1 day to 36 months | 6.35 | 7.40 | 6.75 | 6.75 |
| Equitas Small Finance Bank | 8.00 | 3 years 1 day (Maxima FD) | 7.10 | 7.10 | 7.00 | 7.00 |
| ESAF Small Finance Bank | 7.75 | 2 years to less than 3 years | 6.00 | 6.00 | 5.75 | 5.75 |
| Jana Small Finance Bank | 8.00 | Above 2 years to 3 years | 7.00 | 8.00 | 7.77 | 6.50 |
| Shivalik Small Finance Bank | 8.00 | 23 months 1 day to 27 months | 6.00 | 7.50 | 6.25 | 6.25 |
| slice Small Finance Bank | 7.75 | 18 months 1 day to 18 months 2 days | 6.25 | 7.50 | 7.00 | 6.50 |
| Suryoday Small Finance Bank | 8.10 | 30 months | 7.25 | 7.25 | 7.90 | 7.25 |
| Ujjivan Small Finance Bank | 7.80 | 2 years | 7.25 | 7.25 | 7.20 | 6.50 |
| Utkarsh Small Finance Bank | 8.10 | 666 days | 6.00 | 7.50 | 7.00 | 6.75 |
Small finance bank FDs for senior citizens
| Banks | Highest interest rate slab | 1-year tenure (%) | 3-year tenure (%) | 5-year tenure (%) | 10-year tenure (%) | |
| % | Tenure | |||||
| AU Small Finance Bank | 7.90 | 30 months 1 day to 36 months | 6.85 | 7.90 | 7.25 | 7.25 |
| Equitas Small Finance Bank | 8.50 | 3 years 1 day (Maxima FD) | 7.60 | 7.60 | 7.50 | 7.50 |
| ESAF Small Finance Bank | 8.25 | 2 years to less than 3 years | 6.50 | 6.50 | 6.25 | 6.25 |
| Jana Small Finance Bank | 8.30 | Above 2 years to 3 years | 7.50 | 8.30 | 8.00 | 7.00 |
| Shivalik Small Finance Bank | 8.50 | 23 months 1 day to 27 months | 6.50 | 8.00 | 6.75 | 6.75 |
| slice Small Finance Bank | 7.75 | 18 months 1 day to 18 months 2 days | 6.50 | 7.50 | 7.25 | 6.75 |
| Suryoday Small Finance Bank | 8.25 | 30 months | 7.40 | 7.40 | 8.05 | 7.40 |
| Ujjivan Small Finance Bank | 8.30 | 2 years | 7.75 | 7.75 | 7.70 | 7.00 |
| Utkarsh Small Finance Bank | 8.25 | 666 days | 6.50 | 8.00 | 7.50 | 7.25 |
Source: Paisabazaar, interest rates as of 12 Aug 2026
Corporate FD rates 2026
| Company Fixed Deposit Rates | |||||||
| Company Name | Credit Rating | Interest Rates (p.a.) | Additional interest rate for senior citizen | ||||
| Highest Rate Slab | Applicable tenure | 1-yeartenure | 3-yeartenure | 5-yeartenure | |||
| Shriram Finance* | ICRA – AAA/StableCARE – AAA/StableCRISIL – AAA/StableIndia Ratings and Research – AAA/Stable | 7.50% | 3 years to 5 years | 6.85% | 7.50% | 7.50% | 0.50% |
| Mahindra Finance | CRISIL – AAA/StableIND AAA/Stable – India Ratings and Research | 7.45% | 48 months to 60 months | 6.60% | 7. 40% | 7. 45% | 0.25%-0.35% |
| Manipal Housing Finance Syndicate Ltd. | ACUITE – ACUITE A | 8.25% | 1 year; 2 years; 3 years | 8.25% | 8.25% | 7.75% | 0.25% |
| PNB Housing Finance Ltd. | CRISIL – AA+ (Stable)CARE – AAA (Stable) | 7.25% | 60 months | 6.70% | 7.10% | 7.25% | 0.25%** |
| Sundaram Home Finance | CRISIL – AAA/StableICRA – AAA/Stable | 7.40% | 4 years; 5 years | 6.70% | 7.25% | 7.40% | 0.35%-0.50% |
| Muthoot Capital Services Ltd. | CRISIL – AA-/Stable | 8.95% | 36 months | 7.90% | 8.95% | 8.50% | 0.25% |
| ICICI Home Finance | CRISIL – AAA/StableICRA – AAA/StableCARE – AAA/Stable | 7.35% | 45 months | 6.85% | 7.10% | 7.20% | 0.35% |
| Can Fin Homes Ltd. | ICRA – AAA/Stable | 7.50% | 36 months | 6.50% | 7.50% | 6.75% | 0.25%-0.50% |
| Bajaj Finance Ltd. | CRISIL – AAA/StableICRA – AAA/Stable | 7.40% | 31 months to 60 months | 6.60% | 7.40% | 7.40% | 0.35% |
| LIC Housing Finance Ltd. | CRISIL – AAA/Stable | 6.90% | 5 years | 6.70% | 6.85% | 6.90% | 0.25% |
| *At Monthly Rests. Additional interest of 0.15% p.a on all renewals, where the deposit is matured. Additional interest of 0.05% p.a. for women depositors. | |||||||
| **Applicable for deposits up to Rs 1 crore | |||||||
| Data as on 12 Aug 2026 | |||||||
Risks of investing in small finance bank FD
Small finance bank FDs are RBI-regulated and covered by DICGC insurance up to Rs 5 lakh per depositor per bank, including principal and interest. Any amount above this limit is not covered by insurance and remains exposed to the bank’s financial position.
The risk therefore depends on the individual bank, not simply its category. For larger deposits, investors should assess the bank’s financial strength and consider spreading deposits across banks.
Risks of investing in corporate FD
Corporate FDs aren’t covered under DICGC insurance, so repayment depends on the issuing company’s financial strength.
Investors take credit risk in return for potentially higher returns. Before investing, they should check the issuer’s credit rating, financial position, tenure and withdrawal terms.
A higher interest rate should always be weighed against the additional risk involved.
Conclusion
Small finance banks and corporate issuers may offer higher rates than some large banks. SFB deposits also carry DICGC protection up to Rs 5 lakh per depositor per bank.
Corporate FDs, on the other hand, do not have this protection but may offer higher returns depending on the issuer.
“Investors should weigh the extra return against the credit risk, liquidity and tenure before choosing between these options. For both senior and non-senior investors, the choice between SFB and corporate FDs should reflect their need for safety, income, liquidity and returns,” said Adhil Shetty, CEO, BankBazaar.
Senior citizens may prioritise safety and income, while others may have more flexibility to take credit risk. A mix can work where it suits their financial needs and risk appetite.
Disclaimer: This article is for informational purposes only and should not be construed as investment, financial, tax, or legal advice. Any illustrations, examples, or return projections used in this article are for explanatory purposes only and do not guarantee actual investment outcomes. The views and opinions expressed by experts quoted in this article are their own and should not be considered investment recommendations. Readers should consult a qualified professional before making any financial decisions.
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