Fixed Deposits (FDs) remain one of India’s most trusted ways to grow savings safely. In 2025, Small Finance Banks (SFBs) continue to offer some of the most attractive FD rates in the market—often higher than large banks—while still providing the comfort of regulated, insured banking.
Table of Contents
Small Finance Bank FD Rates Stand Out
- Higher headline rates: Many SFBs offer special tenures with standout returns, especially for 1–5 year buckets.
- Retail deposit focus: Competing for retail deposits means sharper, more competitive rates.
- Assured returns: Fixed, predictable interest credited on schedule.
- Safety net: Deposits are insured up to ₹5 lakh per bank under DICGC. Stay within this cap per bank for maximum safety.
Note: FD rates change often. Treat the table below as indicative (Aug 2025) and verify on the bank’s official page before booking.
Small Finance Bank FD Rates — Quick Comparison (Sep 2025)
Indicative highest rates for deposits up to ~₹2 crore. Senior citizen benefit is typically an extra 0.50% unless mentioned otherwise.
| Bank | Approx. Highest Rate (General) | Senior Citizen Extra | Typical Best Tenure/Notes |
| Ujjivan Small Finance Bank | Up to ~7.45% | +0.50% | Often strong in 18–24 months range |
| AU Small Finance Bank | Up to ~7.10% | +0.50% | Balanced rates across 1.5–3 years |
| Jana Small Finance Bank | Up to ~8.00% | +0.50% | Multiple promo tenures between 1–3 years |
| Unity Small Finance Bank | Up to ~7.75% | +0.50% | Competitive in 12–24 months |
| Utkarsh Small Finance Bank | Up to ~7.65% | +0.50% | Solid 1–3 year buckets |
| Suryoday Small Finance Bank | Up to ~8.20% | Typically +0.20% to +0.50% | Often leads for 5-year tenures |
| Slice (NESB) Small Finance Bank | Up to ~8.50% | +0.50% | Strong in longer tenures |
| Equitas Small Finance Bank | Up to ~7.40% | +0.50% | Wide spread of tenures with steady rates |
| ESAF Small Finance Bank | Up to ~7.60% | +0.50% | Special tenures (e.g., 444/888 days) often attractive |
Pro Tip: Don’t chase the highest number blindly. Match the tenure to your goal and liquidity needs, and split deposits across banks to stay within insurance limits.
How to Choose the Right FD (In 5 Quick Steps)
- Define the goal: Short parking (3–6 months), medium savings (12–24 months), or long growth (3–5 years)?
- Pick the tenure sweet spot: Many SFBs place top rates in 1–3 years or special day counts (e.g., 400/444/888 days).
- Stay insured: Keep total deposits per bank ≤ ₹5 lakh for full DICGC coverage; spread across 2–3 SFBs if needed.
- Check premature policy: Early closure typically attracts a penalty (interest cut). Ensure you’re comfortable with the rule.
- Tax planning: FD interest is fully taxable. Consider cumulative vs. non-cumulative options based on cash-flow needs.
Best-FD Selection Guideline
| Your Goal | Shortlist | Why It Works |
| 1-Year Balance of Return & Safety | Unity SFB / Ujjivan SFB | Competitive mid-term rates without very long lock-in |
| 3–5 Year Wealth Growth | Suryoday SFB / Slice (NESB) SFB | Among the highest long-tenure yields |
| Senior Citizen Maximization | Any SFB offering +0.50% extra | Boosts effective return with the senior citizen premium |
| Short-Term Parking (≤ 6 months) | Ujjivan / Equitas | Decent short-term slabs with flexibility |
Pro Tips to Grow Your Money
- Stagger maturities: Create a mini ladder (e.g., 12, 18, 24 months) to catch rising rates when each FD matures.
- Use special tenures: Watch for 400/444/500/777/888/1001-day schemes which often carry a rate premium.
- Reinvest interest wisely: Cumulative FDs compound better; non-cumulative is ideal for monthly income.
- Split across banks: Optimize for insurance cover and negotiated flexibility.
Risks, Safety & Tax — All Factors are Important
1) Safety & Regulation
SFBs are regulated banks. Deposits up to ₹5 lakh per depositor, per bank are covered by DICGC insurance. To be ultra-conservative, distribute large sums across banks.
2) Premature Withdrawal
Premature withdrawal allowed by most SFBs but with an interest rate cut or penalty. If you anticipate emergency needs, choose shorter tenures or split the FD into smaller parts.
3) Taxation
FD interest is added to your income and taxed at slab rates. Banks may deduct TDS if interest crosses the threshold. Senior citizens can leverage higher TDS thresholds and submit Form 15H if eligible.
Step-by-Step: How to Book a High-Rate FD Online
- Shortlist 2–3 SFBs with tenures that match your goal.
- Open a savings account digitally or via branch (if required by the bank).
- Navigate to “Term Deposit/Fixed Deposit” in the net banking or mobile app.
- Select tenure and interest payout type (cumulative or periodic).
- Confirm deposit details and download the e-receipt. Calendar the maturity date.
Pro Tips: If you’re investing a lump sum (say ₹10 lakh), split it into smaller FDs across 2–3 banks and stagger the maturity dates.
Frequently Asked Questions (FAQs)
What is the typical tenure range for Small Finance Bank FDs?
Anywhere from 7 days to 10 years. The 1–3 year window is where many SFBs post their best rates.
Do senior citizens always get higher FD rates?
Yes, most SFBs offer an extra 0.50% to senior citizens. Some special schemes may differ; always check the fine print.
What is the safest way to invest large amounts in SFB FDs?
Distribute deposits across multiple banks, keeping each bank’s total within ₹5 lakh to remain fully covered by DICGC insurance.
Can I open an FD with just ₹1,000?
Yes, many banks allow small ticket FDs starting from ₹1,000 (limits vary by bank).
Is there a maximum amount for FDs?
No hard maximum for retail deposits, but very large deposits may get customized rates and conditions. Insurance coverage still caps at ₹5 lakh per bank.
What happens if I break my FD before maturity?
The bank will return principal and interest at a reduced rate, and/or apply a penalty as per policy. Always check premature closure terms.
Is TDS applicable on FD interest?
Yes, if interest crosses the applicable threshold. You can submit Form 15G/15H if eligible to avoid TDS, but tax liability depends on your slab.
Which SFB gives the highest FD rates right now?
Longer-tenure specials from banks like Suryoday and Slice (NESB) are among the highest as of Sep 2025. Always check the latest rate card before booking.
Should I choose cumulative or non-cumulative FD?
Pick cumulative to maximize compounding if you don’t need regular income. Choose non-cumulative for monthly/quarterly payouts to fund expenses.
Conclusion
Small Finance Banks are delivering excellent FD value in 2025. If you want to squeeze more from your idle cash without taking market risk, consider:
- For long-term growth: Look at SFBs with 3–5 year specials.
- For mid-term balance: 12–24 month slabs in banks like Unity/Ujjivan can be sweet spots.
- For seniors: Always capture the +0.50% premium.
- For safety: Keep each bank’s exposure within ₹5 lakh, and diversify.
Verify rates on the bank’s official page before booking, and build a simple FD ladder to stay liquid and opportunistic. Done right, your FD strategy can quietly outperform the crowd—safely.