FD Interest Rates 2026 Update In 2026, fixed deposits (FDs) continue to be one of the most popular investment options in India for risk-averse savers seeking assured returns. Following the Reserve Bank of India’s recent pause on repo rate changes, many banks have adjusted their FD interest rates in response to the evolving macroeconomic environment. This article provides an updated snapshot of the latest FD rates offered by major banks including State Bank of India (SBI), Punjab National Bank (PNB), ICICI Bank, Bank of Baroda (BoB), Canara Bank, HDFC Bank, and Axis Bank in 2026.
Understanding current FD rates helps investors make informed choices about where to park their savings for optimal returns.
Why FD Rates Matter in 2026
Fixed deposits offer guaranteed returns and capital protection, making them especially attractive during periods of economic uncertainty or volatile markets. In 2026, even after the RBI’s repo rate pause — which influences borrowing costs and deposit rates — banks continue to compete for retail deposits by offering attractive FD rates.
FD rates are typically higher for senior citizens, and many banks provide incremental benefits for longer tenures.
Overview of FD Rates Across Leading Banks
Here’s the latest rate scenario for popular tenures — 1 year, 2 years, 3 years, and 5 years — as offered by major banks in early 2026:
| Bank | 1 Year FD | 2 Year FD | 3 Year FD | 5 Year FD |
|---|---|---|---|---|
| SBI (State Bank of India) | 6.50% | 6.75% | 6.90% | 7.10% |
| PNB (Punjab National Bank) | 6.55% | 6.80% | 6.95% | 7.15% |
| ICICI Bank | 6.70% | 6.85% | 7.00% | 7.20% |
| Bank of Baroda (BoB) | 6.60% | 6.80% | 6.95% | 7.10% |
| Canara Bank | 6.55% | 6.75% | 6.90% | 7.05% |
| HDFC Bank | 6.50% | 6.70% | 6.85% | 7.00% |
| Axis Bank | 6.65% | 6.85% | 7.05% | 7.25% |
Note: These rates are indicative and may vary slightly based on branch, customer category, and specific FD schemes.
Senior Citizen Benefits
Most banks offer an additional 0.25%–0.75% interest rate premium for senior citizens on FD investments. This means a 5-year FD rate that appears as 7.10% for regular investors could effectively become 7.35% or higher for senior citizens at institutions like SBI, ICICI Bank, and Axis Bank.
Factors Influencing FD Rates After RBI Repo Rate Pause
The RBI’s pause on the repo rate — the rate at which it lends to commercial banks — influences how banks price their deposit products. When the RBI holds rates steady, banks tend to maintain or marginally adjust their FD rates rather than implement sharp increases or cuts.
Other factors affecting FD rates include:
-
Inflation outlook
-
Bank liquidity needs
-
Competition among banks for retail deposits
-
Demand for credit in the economy
As commercial banks balance deposit and loan portfolios, FD rates may remain steady or see minor adjustments through 2026.
How to Choose the Right FD Tenure
Short-term FDs (less than 1 year) are suitable if interest rates are expected to rise, as they allow frequent reinvestment at potentially higher rates. Long-term FDs (3–5 years) generally offer higher rates, which benefit investors planning for goals like children’s education or retirement.
Before choosing a tenure, consider factors such as liquidity needs, tax implications, and interest payout frequency (monthly, quarterly, or on maturity).
Taxation on FD Interest
Interest earned on fixed deposits is fully taxable as per your income tax slab. Banks also deduct TDS (Tax Deducted at Source) if the interest paid exceeds the threshold (usually ₹40,000 per financial year for residents). Senior citizens may enjoy higher thresholds, and submitting Form 15G/15H can help avoid TDS if conditions are met.
Tips to Maximize FD Returns
-
Ladder your FDs by investing in multiple tenures to balance liquidity and returns.
-
Compare special FD schemes like tax saver FDs or quarterly interest payouts if they suit your goals.
-
Review rates periodically, as banks may revise them during the year.
-
Use digital platforms — many banks offer slightly higher rates for online FD bookings.
Conclusion
As of 2026, fixed deposits remain a reliable, low-risk investment for conservative savers, with several banks offering competitive interest rates even after the RBI’s repo rate pause. Institutions like ICICI Bank and Axis Bank are offering relatively higher rates, especially for longer tenures such as 5-year FDs. Senior citizens stand to benefit further with added rate premiums.
Whether you are planning for short-term goals or long-term financial security, understanding the latest FD rates across major banks helps you optimize your savings effectively.
1. What is the current FD rate trend in India in 2026?
Most major banks are offering competitive FD rates in 2026, with 5-year rates typically around 7% or higher following the RBI’s recent repo rate pause.
2. Which bank offers the highest FD rate for 5 years?
Among the listed banks, Axis Bank is offering one of the highest 5-year FD rates at around 7.25%.
3. Do senior citizens get higher FD rates?
Yes, senior citizens usually receive an additional 0.25% to 0.75% interest premium on top of regular FD rates.
4. Are FD interest earnings taxable?
Yes, FD interest is taxable according to your income slab, and TDS may apply if interest income exceeds the threshold set by the tax department.