Senior citizens can enjoy attractive returns on one-year fixed deposits (FDs) at select small finance banks, with interest rates up to 8.75%. Jana and Ujjivan Small Finance Banks offer the highest rates of 8.75%, followed by Equitas, Utkarsh, Suryoday, and Unity Small Finance Banks with rates ranging from 8.6% to 8.35%. To encourage savings, the Indian government allows senior citizens to claim a tax deduction of up to Rs 50,000 on interest income under Section 80TTB.
However, premature withdrawal penalties apply, which can reduce the interest rate. For example, Jana Small Finance Bank charges a 1% penalty for FDs below Rs 300 lakh and 1% penalty for FDs of Rs 300 lakh or more. It is essential to read the terms and conditions carefully before opening an FD.
These high-interest rates make small finance banks an attractive option for senior citizens looking to park their savings. With these rates, senior citizens can earn a lucrative return on their deposits, making them a viable option for fixed-income earners.