FD Interest: In 2025, fixed deposits (FDs) are once again becoming a popular choice for saving money. Due to rising interest rates, many banks have increased the FD rates to attract customers. Surprisingly, small finance banks (SFBs) are offering better interest rates than big banks like SBI, HDFC, or ICICI. If you want to earn more from your savings, these 8 small finance banks are giving higher FD returns in 2025.
Why FD Rates are Rising?
The Reserve Bank of India (RBI) has kept the repo rate steady, but due to high inflation and demand for liquidity, many banks have increased their FD interest rates to get more deposits. Small finance banks need more funds to give loans, so they offer higher FD rates to attract more depositors.
Benefits of Choosing Small Finance Banks for FDs
- Higher interest compared to big banks
- Safe – Most are RBI-regulated and covered under DICGC insurance up to ₹5 lakh
- Short-term and long-term options available
- Special FD schemes for senior citizens
8 Small Finance Banks Giving Higher FD Interest in 2025
Here’s a list of 8 small finance banks offering the best FD interest rates in India as of July 2025:
| Bank Name | General Public FD Rate (Max) | Senior Citizens FD Rate | Tenure |
| Unity Small Finance Bank | 9.00% | 9.50% | 1001 days |
| Utkarsh Small Finance Bank | 8.50% | 9.00% | 700 days |
| ESAF Small Finance Bank | 8.25% | 8.75% | 999 days |
| Fincare Small Finance Bank | 8.30% | 8.80% | 750 days |
| Suryoday Small Finance Bank | 8.60% | 9.10% | 999 days |
| AU Small Finance Bank | 8.00% | 8.50% | 24 months |
| Equitas Small Finance Bank | 8.25% | 8.75% | 888 days |
| North East Small Finance Bank | 8.40% | 8.90% | 2 years |
Let’s Understand With a Simple Example
Suppose you invest ₹1 lakh in Unity Small Finance Bank at 9.00% for 1001 days.
After maturity, your total amount will be around ₹1,24,800, which is higher than the ₹1,18,000 you would get at 6.5% from a major bank like SBI.
So, you earn ₹6,800 more just by choosing a small finance bank!
Who Should Choose These FDs?
- Senior citizens – They get extra 0.50% interest
- Retired people – Want regular and safe returns
- Savers looking for short-term growth
- Investors avoiding risky options like stock market
Things to Keep in Mind
- DICGC insurance protects only up to ₹5 lakh per depositor per bank.
So, split your FD amount across banks if you’re investing a big amount. - Check the bank’s credit rating and reputation before investing.
- Read the pre-mature withdrawal rules—some banks charge a penalty.
- Keep an eye on taxation. FD interest is taxable under “Income from Other Sources.”
Tips to Maximize FD Returns in 2025
- Use FD laddering – Split your money across different tenures to get flexibility
- Choose cumulative FDs if you don’t need regular income
- Compare interest rates online before investing
- Use senior citizen FD schemes if you’re eligible
Final Words
Big banks are trusted by all, but in 2025, small finance banks are becoming better choices for FD investments. With interest rates as high as 9%, your savings can grow much faster than in traditional banks.
If you are planning a safe and profitable way to grow your money in 2025, then FDs from these 8 small finance banks can be a smart move. Just do proper research, split your investments, and enjoy higher returns.
