A fixed deposits (FD) is a savings product offered by banks and non-banking financial companies (NBFCs). You invest a fixed amount of money (called “principal”) for a chosen time period. Next, the bank agrees to pay you a pre-fixed rate of interest on it. This allows you to earn non-market-linked and guaranteed returns.
In India, the interest rate on FDs is different across institutions, but is usually higher than what savings accounts provide. You can also choose how long to keep your money, with options starting from 7 to 14 days and going up to 10 years.
Want to know more? In this article, you will learn some primary features of a fixed deposit account and see how FDs work. Next, you will check the latest FD rates 2025 offered by leading Indian banks and NBFCs.
5 Key Features of Fixed Deposits
By investing in fixed deposits, you get to enjoy guaranteed safety and returns. The interest rate is locked, and you know exactly how much you will receive at the end of the tenure. Also, your principal is not exposed to market risks. Thus, this financial product can be ideal for conservative and low-risk investors specifically looking for capital protection.
For more clarity, check out the five primary features of fixed deposits below:
1. Growth Through Compounding
In an FD, the interest you earn can itself earn more interest if you choose the “cumulative option”. This is called compounding. Instead of withdrawing the interest regularly, it gets added to your deposit. Now, in the next cycle, interest is calculated on the new total.
When you keep repeating this process, it builds a larger final amount and accelerates the speed of your corpus accumulation.
2. Accessible for Small Investors
You don’t need a large amount to start a fixed deposit account. Many banks and NBFCs allow you to open an FD with as little as ₹500. This allows even small-ticket investors to start saving and creating wealth.
Always remember that even small but consistent deposits can grow in the long term, particularly when left invested for longer tenures.
3. Liquidity When You Need It
Fixed deposits usually lock your money for a chosen period, but most banks and NBFCs allow you to break the FD before maturity if required. This option gives you access to your funds during emergencies.
However, the drawback is that you may lose part of the interest earned (usually 1% to 2%) due to the levy of a “premature withdrawal penalty”. However, this facility still provides a safety net when urgent cash is needed.
4. Non-Complex Investment Process
You don’t need a demat account or have to follow a complex application process to start an FD. You can easily do it by visiting a bank branch or starting your FD online using the GoldenPi platform. The online process is 100% digital and can be completed within minutes.
On GoldenPi, you also get a variety of FD options offered by leading financial institutions, such as Suryoday Small Finance Bank, Unity Small Finance Bank, Bajaj Finance, Shriram Finance, and more.
5. Extra Benefits for Senior Citizens
Both banks and NBFCs offer higher FD rates for senior citizens (aged 60 and above) compared to regular customers. This bonus interest rate is usually 0.25% to 1% higher than the normal rate card. This allows seniors to earn better returns on their savings or retirement corpus.
Furthermore, some banks also provide extra interest to super senior citizens (aged 80 and above). This is over and above the additional rate already offered to senior citizens.
How Does a Fixed Deposit Work?
A fixed deposit (FD) is like lending a fixed sum to a bank or NBFC for a set time. At the end of the term, the institution returns your principal and pays interest for using your money. For a greater understanding, check out how fixed deposits work in two easy steps:
Step I: You Invest in an FD
You invest a fixed amount for a chosen tenure by either visiting the GoldenPI platform online or any bank branch in person. This rate is decided when you open the FD. Usually,
- Short tenures (for example, 7 to 14 days) carry lower annual rates.
- Longer tenures (for example, 1 year or more) offer higher interest rates.
The institution also guarantees to return your principal + the agreed interest at maturity.
Step II: You Decide The Interest Payout Option
The next step is to choose how you want the interest to be paid. Here you get two options: cumulative or non-cumulative. Let’s understand both in detail:
| Cumulative FD (Interest Re-invested) | Non-cumulative FD (Interest Paid Out) |
|---|---|
|
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Example
Let’s understand both these options through an example. Let’s say you are a senior citizen and want to invest ₹1,00,000 in FDs. You book a cumulative FD on the GoldenPi platform at an annual rate of 8% for 2 years.
- Now, your “Year 1” interest is ₹8,000 (₹1,00,000 × 0.08).
- The principal after year 1 will become ₹108,000 (1,00,000 + 8,000).
- Next, the “Year 2” interest will be ₹8,640 (₹1,08,000 × 0.08).
- Finally, your maturity amount will be ₹1,16,640. (₹1,08,000 + ₹8,640)
- In this way, your total interest earned is ₹16,640 (₹1,16,640 − ₹1,00,000).
In the same example, let’s assume you book a non-cumulative FD and will receive annual payouts. Now, your interest each year would be ₹8,000 (₹1,00,000 × 0.08). Interest over 2 years will be ₹16,000 (₹8,000 + ₹8,000). At maturity, your principal amount of ₹1,00,000 will be returned.
Now, if you compare, in the compounding option, you receive an additional interest rate of ₹640 (₹16,640 – ₹16,000). This happened because of the “interest on interest” you received, which increased the overall returns.
Latest Fixed Deposit Rates 2025
Note that FD rates 2025 vary across banks and NBFCs, depending on:
- Tenure
- Scheme type
- Customer category
Below is a detailed look at the latest FD rates 2025 offered by leading financial institutions for both general customers and senior citizens:
A) FD Rates 2025 for General Investors
| Bank/ NBFCs | Interest Rate (p.a.) |
|---|---|
| Suryoday Small Finance Bank | 4.00% to 8.20% |
| Unity Small Finance Bank | 4.00% to 6.75% |
| Shriram Finance |
|
| Bajaj Finance |
|
| Mahindra Finance |
|
Note: The above interest rates are valid as of September 19, 2025. Investors should check the latest interest rates before investing.
B) FD Rates for Senior Citizens 2025
| Bank/ NBFCs | Interest Rate (p.a.) |
|---|---|
| Suryoday Small Finance Bank | 4.20% to 8.40% |
| Unity Small Finance Bank | 4.00% to 7.25% |
| Shriram Finance |
|
| Bajaj Finance |
|
| Mahindra Finance |
|
Note: The above interest rates are valid as of September 19, 2025. Investors should check the latest interest rates before investing.
Book an FD online via GoldenPi Within Minutes! No Branch Visits Required
So, till now, you must have understood that in fixed deposits, you get to choose a specific tenure and earn guaranteed or “pre-decided income”. Your returns are not subject to market risk.
Next, when it comes to capital safety, all your bank FDs (both principal + interest) are insured up to ₹5 lakhs by the Deposit Insurance and Credit Guarantee Corporation (DICGC). This makes FDs one of the most trusted options for conservative investors.
Are you searching for good fixed-income opportunities? GoldenPi gives you access to a wide range of FD products from leading institutions such as:
- Suryoday Small Finance Bank
- Unity Small Finance Bank
- Bajaj Finance
- Mahindra Finance
- Shriram Finance, and more.
You can start your application online through the GoldenPi platform and complete the process within minutes. No branch visits required.
Fixed Deposit FAQs
Do fixed deposits carry a sovereign guarantee?
Bank FDs do not carry a sovereign guarantee. However, deposits in scheduled banks are insured up to ₹5 lakhs per depositor by DICGC. Please further note that NBFC FDs are not covered under this insurance cover.
Is interest on a tax-saving FD exempt from tax?
No. Only the principal amount invested in a 5-year tax-saving FD qualifies for a deduction under Section 80C of the Income Tax Act (up to ₹1.5 lakhs). The interest earned is taxable as per your income tax slab.
How to use the FD calculator online?
By using an FD calculator, you can instantly calculate your total interest and maturity amount. All you have to do is make these four basic inputs:
- Deposit amount
- Tenure
- Citizen type (general or senior citizen)
- Interest rate (pre-filled in certain calculators)
Which bank offers competitive FD rates in 2025?
As of September 19, 2025, Suryoday Small Finance Bank offers an interest rate of 8.40% p.a. (for senior citizens) and 8.20% p.a. (for general customers) for a tenure of 5 years.
Alternatively, if you want to invest in a corporate or NBFC FD, Shriram Finance offers interest rates up to 8.10% p.a. (for senior citizens) and 7.60 p.a. (for regular customers) for a tenure of 36 to 60 months.
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Disclaimer:
This information is for general information purposes only. GoldenPi makes no guarantee on the accuracy of the data provided here; the information displayed is subject to change and is provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. Investments in the securities market are subject to market risks. Read all the offer-related documents carefully before investing.
Fixed Deposit schemes are offered by financial institutions, which are regulated by the Reserve Bank of India. GoldenPi Securities Private Limited is a registered debt broker and acts as a distributor and not as a manufacturer of the product.
