Three banks in India have recently updated their fixed deposit (FD) interest rates, offering varying returns for both general and senior citizens, depending on the deposit amount and tenure. Here’s an overview:
Punjab & Sind Bank FD Rates Revised
Effective November 14, 2024, Punjab & Sind Bank has revised its fixed deposit rates. The highest rate of 7.50% per annum is available on non-callable deposits with a tenure of 555 days.
For Regular Citizens:
- Callable deposits: 4% to 7.45% per annum
- Non-callable deposits: 4.25% to 7.50% per annum
- Highest rate: 7.50% for 555-day non-callable deposits
For Senior Citizens:
- Additional 0.50% interest on deposits of 180 days or more
- Highest rate: 8% for 555-day non-callable deposits
Special Rates for Super Senior Citizens (80+ years):
- 8.15% for 555-day non-callable deposits
- 8.10% for 555-day callable deposits
Bank of Maharashtra Joins the Trend
The Bank of Maharashtra has also updated its FD interest rates, effective November 14, 2024. Rates for general citizens range from 2.75% to 7.35% per annum, while for senior citizens, the rates range from 2.75% to 7.85%.
For Regular Citizens:
- Interest rates: 2.75% to 7.35% per annum
- Special FD schemes:
- 6.90% for 200-day tenure
- 7.35% for 333-day tenure
- 7.10% for 400-day tenure
- 7.75% for 777-day tenure
For Senior Citizens:
- Interest rates: 2.75% to 7.85% per annum
- Special FD schemes:
- 7.40% for 200-day tenure
- 7.85% for 333-day tenure
- 7.60% for 400-day tenure
- 7.75% for 777-day tenure
Also Read- Mutual Funds or Fixed Deposit: The Better Investment Option
YES Bank Updates FD Rates
YES Bank has lowered its FD interest rates for tenures under Rs 3 crore, with the changes taking effect from November 5, 2024. The 18-month FD rate has decreased from 8% to 7.75% per annum.
For Regular Citizens:
- Interest rates: 3.25% to 7.75% per annum
- Highest rate: 7.75% for 18-month FD tenure
For Senior Citizens:
- Interest rates: 3.75% to 8.25% per annum
- Highest rate: 8.25% for 18-month FD tenure
RBI Interest Rate Cuts May Impact FD Rates
Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal have suggested that the Reserve Bank of India (RBI) consider cutting interest rates to support economic growth. While the RBI has kept its key policy rate at 6.5% since 2019, a recent Reuters poll predicts that the RBI might reduce the rate by 25 basis points to 6.25% in December 2024.
What This Means for Fixed Deposit Investors
If the RBI cuts interest rates, it could be an excellent time for investors to lock in higher FD rates. “Now is the best time to secure high FD returns, as rates may decline in the coming months,” said Adhil Shetty, CEO of Bankbazaar. With the potential for rate cuts in December 2024 and February 2025, acting now could help protect your savings from future rate reductions.
How is FD Interest Taxed in India?
In India, the tax on fixed deposits is based on the interest earned, not the principal. “The interest earned is added to your total income and taxed according to your income tax slab,” explains Adhil Shetty. If interest exceeds Rs 50,000 for senior citizens (Rs 40,000 for others), the bank deducts 10% TDS. Without a PAN, TDS increases to 20%.
For example, if Mary, a 39-year-old from Lucknow, earns Rs 75,000 annually from her FD interest:
- Total interest earned: Rs 75,000
- TDS threshold: Rs 40,000 for general citizens
- TDS deducted by the bank: 10% of Rs 75,000 = Rs 7,500
If Mary’s total income is below Rs 2.5 lakh, she won’t need to pay additional tax. She can also submit Form 15G to prevent TDS deductions if her income is below the taxable limit.