Fixed deposit (FD) investors have felt the impact of falling interest rates over the past year.
After the Reserve Bank of India cut the repo rate by 125 basis points in 2025, banks and NBFCs slowly reduced FD rates across tenures.
For many senior citizens who depend on FD income for monthly expenses, this has raised concerns.
But here’s the good news: even in February 2026, some banks are still offering up to 7.75% interest for senior citizens.
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Private Banks Offering Up to 7.75%
Among private lenders, the highest FD rates for senior citizens are currently offered by:
YES Bank – 7.75%
Bandhan Bank – 7.70%
RBL Bank – 7.70%
IDFC FIRST Bank – 7.50%
IndusInd Bank – 7.50%
Private banks are clearly offering a premium over public sector banks in the current rate cycle.
PSU Banks: Slightly Lower but Trusted
Among public sector banks, the top rates are:
Bank of Baroda – 7.00%
Punjab National Bank – 6.90%
Central Bank of India – 6.75%
Bank of Maharashtra – 6.70%
Union Bank of India – 6.70%
The gap between the highest private and PSU bank rate is about 0.75 percentage points (7.75% vs 7.00%).
On a ₹10 lakh FD for one year, that difference can mean nearly ₹7,500 extra interest before tax — a meaningful amount for retirees.
Is Your Money Safe? Know the Insurance Rule
Many depositors overlook one key point — insurance coverage.
All bank deposits are insured up to ₹5 lakh per customer per bank under the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of RBI.
This ₹5 lakh limit includes both principal and interest.
If you are investing more than ₹5 lakh, consider splitting your deposits across multiple banks to maximise insurance coverage.
What Should Senior Citizens Do Now?
Even though rates have cooled, FDs remain popular because they offer predictable income and capital safety.
Here are a few smart tips:
Compare tenure-specific rates carefully.
Often, the highest rate applies only to special tenures like 444 or 555 days.
Check premature withdrawal penalties.
Banks may charge 0.5%–1% if you break the FD early.
Choose monthly or quarterly payout options if you need regular income.
Remember that FD interest is fully taxable.
If your income is below the taxable limit, submit Form 15H to avoid TDS.
Don’t chase the highest rate blindly.
Balance returns with safety and diversification.
The Bottom Line
Yes, FD rates have come down after last year’s repo rate cut.
But senior citizens can still earn up to 7.75% in February 2026 — if they compare options carefully.
For retirees depending on fixed income, even a small difference in interest rate can make a noticeable impact on annual earnings.
The key is to focus not just on returns, but also on safety, liquidity, and smart diversification.