Senior citizens can earn up to 8.8% fixed deposit interest. Check highest FD rates in July 2025

Several banks have cut their fixed deposit (FD) interest rates multiple times in recent times. Even with the revisions, senior citizens can earn up to 8.8% interest on fixed deposits.

Small finance banks like Suryoday Small Finance Bank and Utkarsh Small Finance Bank are offering senior citizen FDs with interest rates as high as 8.8% and 8.75% respectively, and many other banks are also offering high interest rates for senior citizens.

RBI repo rate cut

So far in 2025, the Reserve Bank of India (RBI) has cut the repo rate by 100 basis points (1%). In the most recent monetary policy committee (MPC) meeting held in June, the RBI introduced a jumbo repo rate cut of 50 bps, and the key rate was reduced by 25 bps each in the meetings held in February and April.

When the RBI cuts the repo rate, which is the rate at which it lends money to banks, borrowing becomes cheaper for us. However, with this, banks also reduce interest on fixed deposits. Banks do this as they no longer need to offer higher interest rates on FDs to get funds, which they can get from the RBI at affordable rates.

In the last few months, banks have cut their interest rates in line with the monetary policy. As banks continue to revise their rates, most are still offering high rates for senior citizens on fixed deposits.

Further, senior citizens also enjoy a higher threshold for TDS deduction on fixed deposit interest as announced in the Union Budget 2025. With effect from April 1, 2025, banks can only deduct TDS if the total interest earned by a senior citizen exceeds ₹1 lakh in a financial year, which was at ₹50,000 previously.

Additionally, senior citizens who want to avoid paying tax even if their interest income exceeds ₹1 lakh in a year, can submit the self-declaration form Form 15H to their banks if their income is below the taxable limit (that is, below ₹12 lakh, starting from FY26).

Senior citizen fixed deposit interest rates

Currently, banks are offering interest rates up to 8.8% for senior citizen FDs. While small finance banks are offering better interest rates, with the highest being 8.8% offered by Suryoday Small Finance Bank, many public and private banks are also offering decent rates up to 8.55% (SBM Bank).

Let’s take a look at the top public, private, and small finance banks offering the highest interest rates on FDs to senior citizens in July 2025:

Even with the repo rate cuts, these banks are offering attractive rates for senior citizens. Before you book an FD, remember to compare the rates offered by all banks and financial institutions to get the best returns. Many banks are expected to revise the rates again, so book your FDs in July at the rates and tenures best suited for you.