Best FD Interest Rates For January 2026: Compare Attractive Banks FD Rates Here

Against the backdrop of uncertainties in the financial market, many investors are turning to traditional investment avenues such as fixed deposits, considering their safety and assured returns. As of December, many lenders are providing attractive interest rates for fixed deposits, with small finance banks leading, in offering interest rates of up to 8 per cent per annum. Let's have a look at the interest rates offered by banks.

Small Finance Banks

Jana Small Finance Bank and Suryoday Small Finance Bank are both paying up to 8 per cent per annum on deposits kept for one to five years. Slice Small Finance Bank is slightly lower, at 7.75 per cent per annum for the same tenure. ESAF Small Finance Bank is offering up to 7.60 per cent per annum, while Utkarsh Small Finance Bank is paying up to 7.50 per cent per annum.

These figures show that small finance banks are competing significantly to draw depositors, giving them better returns compared to larger banks.

Private Sector Banks

Private sector banks are also giving good returns, but not quite as good as the best rates from local finance banks. Bandhan Bank and RBL Bank are both paying up to 7.20 per cent per annum for deposits between one and five years. IDFC First Bank, Yes Bank, and IndusInd Bank are each offering up to 7 per cent per annum for the same tenure.

While these rates are lower than those of small finance banks, they remain attractive for investors who prefer the stability and wider reach of private sector institutions.

Public Sector Banks

Public sector banks, which are government-owned, are offering more conservative rates. Bank of India is paying up to 6.70 per cent per annum for deposits between one and five years. Bank of Baroda and Indian Bank are both offering up to 6.60 per cent per annum. Punjab National Bank is slightly lower at 6.50 per cent per annum, while Canara Bank is at 6.15 per cent per annum.

These rates reflect the cautious approach of public sector banks, which focus more on stability than on competing aggressively for deposits.

Foreign Banks

Foreign banks operating in India are showing varied interest rates. Deutsche Bank is offering up to 7 per cent per annum for deposits between one and five years, which is competitive with private sector banks. HSBC Bank, however, is paying only up to 5.50 per cent per annum for the same tenure, making it less attractive compared to other options.

What Investors Should Know

When choosing a fixed deposit, investors should understand that the interest rate is the percentage of money the bank pays them each year for keeping their funds locked in. For example, if someone deposits Rupees 100,000 at 8 per cent per annum, they will earn Rupees 8,000 in interest in one year.

The tenure, which means the length of time the money is kept in the bank, is important because the rate applies only if the money is not withdrawn early. Most banks offer these rates for periods ranging from one year to five years.

Small finance banks are currently giving the highest returns, touching 8 per cent per annum. Private sector banks are close behind with rates around 7 to 7.20 per cent per annum. Public sector banks are lower, between 6.15 and 6.70 per cent per annum. Foreign banks vary, with Deutsche Bank competitive at 7 per cent and HSBC much lower at 5.50 per cent.