8.5% FD: Which Banks Pay Your Parents Most?

Some small finance banks are offering senior citizens up to 8.5% interest on fixed deposits right now. If your parents or in-laws have idle savings in a big bank, they could be leaving thousands of rupees on the table every year.

Here's what happened: Certain small finance banks are currently offering senior citizens FD interest rates as high as 8.5% per annum on specific tenures in September 2025.. Senior citizens typically receive an additional 0.25% to 0.50% interest over the regular fixed deposit rate at most banks, as a standard policy benefit.. Large public sector banks like SBI and Bank of Baroda continue to offer senior citizen FD rates in the 7.5%–7.75% range, well below the small finance bank peak..

What you should do: Check your parent's or spouse's existing FD maturity date — if it falls in the next 60–90 days, research current senior citizen rates before auto-renewal locks in a lower rate.. Compare rates across at least 3 RBI-regulated small finance banks and 2 public sector banks using aggregator tools before placing or renewing any deposit above ₹1 lakh.. Split any deposit above ₹5 lakh across two different banks so the full amount stays within the DICGC deposit insurance limit of ₹5 lakh per depositor per bank..

Most banks auto-renew FDs at the current rate on maturity — call the branch or update your mandate online to 'pay out on maturity' instead, so you keep the choice in your hands.