Fixed deposits (FDs) are popular investment options because of assured returns and low risk. They are also an excellent way to avail of a loan if you need emergency funds.

FDs offer a fixed rate of interest, and the returns can be calculated using the formula: {P*[(1+r/n) ^ (n*t)]} - P 

Where P is the principal amount, r is interest rate, n is the frequency at which the interest is compounded, and t is the total deposit tenure. Alternatively, you can use an online calculator to estimate the FD interest earnings.


Factors affecting FD interest rates

When you choose the right FD, you can benefit from high returns. The interest rates may vary from one issuer to another and depends on four major factors discussed below:



  • Deposit amount


The initial deposit amount affects the rate of interest. Generally, the interest rate is lower if the principal investment is between INR 1 crore and INR 5 crores. For deposits exceeding INR 5 crores, the interest rate may further reduce.


  • Investment tenure


Another factor that affects the FD interest rates is investment tenure. The duration varies from one year to five years and you may choose a term that meets your requirements. Generally, issuers pay a higher FD interest rate for longer investment tenures.


  • Type of depositor


Most Fixed Deposit issuers offer a different rate for senior citizens and regular investors. Senior investors older than 60 years often enjoy a higher interest rate on their investments when compared to younger investors.


  • Issuing company


FDs were primarily offered by banks; however, several companies and non-banking financial companies (NBFCs) also offer such deposits. Compared to bank FDs, companies and NFBFCs offer a higher rate of interest on their corporate deposits. You may also open deposit accounts with post offices; however, they offer a lower fixed deposit rate when compared to NBFCs.


Top financial institutions that offer the best FD rates



Rate for general investors

Rate for senior citizens

State Bank of India

2.90% - 5.40%

3.40% - 6.20%

Punjab National Bank

3.00% - 5.25%

3.50% - 5.75%

Union Bank of India

3.00% - 5.60%

3.50% - 6.10%


2.50% - 5.50%

3.00% - 6.30%


2.50% - 5.50%

3.00% - 6.25%

Mahindra Finance

5.70% - 6.45%

5.95% - 6.70%


FDs are a good investment option to reduce your risk as the returns are not affected by market volatility. Mahindra Finance offers high interest rates and safe FD schemes, making it a beneficial choice. You may visit their website and calculate FD returns via an online calculator today.