8.3% FD for Senior Citizens: Is Your ₹5L Safe?

Some small finance banks are offering senior citizens up to 8.3% interest on 3-year fixed deposits. That sounds great, but deposits are insured only up to ₹5 lakh — so where you park your money matters a lot.

Here's what happened: Select small finance banks are currently offering senior citizens FD rates as high as 8.3% per annum on 3-year deposits — well above what most large banks offer.. Deposit insurance under DICGC covers only up to ₹5 lakh per depositor per bank — principal and interest combined — regardless of how much you invest.. TDS applies if FD interest income exceeds ₹1 lakh in a financial year for senior citizens; submitting Form 15H at the start of the year prevents automatic deduction..

What you should do: Compare FD rates across small finance banks AND large scheduled banks — weigh the higher rate against the risk of a less-established institution before committing.. Split large deposits across multiple banks so each holding stays within the ₹5 lakh DICGC insurance limit, protecting your entire corpus in case of a bank failure.. Submit Form 15H to your bank at the beginning of every financial year if your total income is below the taxable threshold — this stops TDS from being cut on your FD interest..

Park no more than ₹4.5 lakh per FD account so accrued interest doesn't push your insured total past the ₹5 lakh DICGC limit before maturity.