Fixed Deposit (FD) Interest Rates

Fixed Deposit (FD) is a financial instrument provided by banks and non-banking financial companies (NBFCs) where you can deposit a lump sum of money for a fixed tenure at a predetermined interest rate. The interest is paid at regular intervals or at maturity, and the principal amount is returned at the end of the tenure.

FD interest rates are predetermined and fixed for the entire tenure of the deposit. They can be simple or compound interest rates. Simple interest is calculated on the principal amount, whereas compound interest is calculated on the principal plus any interest earned previously.

Several factors influence FD interest rates, including:

• Monetary policy: Decisions by the Reserve Bank of India (RBI) on repo rates.


• Inflation rates: Higher inflation generally leads to higher interest rates.


• Economic conditions: Economic growth and stability impact rates.


• Bank liquidity needs: Demand and supply of funds within the bank.


• Tenure of the FD: Longer tenures generally offer higher rates.

Banks typically review and adjust FD interest rates based on changes in the economic environment, RBI policy changes, and their internal liquidity requirements. This can happen quarterly, semi-annually, or in response to major economic events.

You can earn an FD interest rate of up to 9.2% per year with Airtel Finance. For more information, download the Airtel Thanks app.

No, FD interest rates vary based on the tenure of the deposit. Generally, longer tenures offer higher interest rates, but this can depend on the bank’s policies and the prevailing economic conditions.

Many banks offer higher interest rates to senior citizens as an incentive for their deposits. The additional rate typically ranges from 0.25% to 0.75% above the standard rates offered to other customers.

Simple interest on FDs is calculated only on the principal amount, resulting in consistent interest earnings each period. Compound interest is calculated on both the principal and previously earned interest, leading to interest-on-interest, which increases the total earnings over time. Thus, compound interest typically yields higher returns than simple interest.

You can use the Airtel Finance FD interest calculator to find out how much you will earn when you deposit your funds in the FD.

Premature withdrawal of an FD usually incurs a penalty, and the interest rate applied may be lower than the originally agreed rate. The bank might also apply a penalty fee or a reduction in the interest rate by a certain percentage.

Yes, many banks offer loans against FDs. The interest rate for such loans is usually 1-2% higher than the FD interest rate. This type of loan is considered secure because the FD serves as collateral.

The RBI influences FD interest rates primarily through its monetary policy actions, such as changes in the repo rate, which is the rate at which banks borrow money from the RBI. A change in the repo rate affects the cost of funds for banks, which in turn influences the interest rates offered on FDs.

Interest earned on FDs is taxable as per your income tax slab. Banks deduct Tax Deducted at Source (TDS) at 10% if the interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year. You can claim a credit for the TDS deducted while filing your income tax return.

With cumulative FDs, the interest is compounded and paid at maturity along with the principal. For non-cumulative FDs, the interest is paid out at regular intervals (monthly, quarterly, half-yearly, or annually). Cumulative FDs typically offer a slightly higher effective interest rate due to compounding.

FDs are considered safer and provide guaranteed returns, making them a preferred choice for risk-averse investors. If you want to invest but want assured returns, then choose Airtel Finance Fixed Deposits for the best results.