The Reserve Bank of India (RBI) cut the repo rate in February 2025. Post this, many fixed deposit investors are looking for FD options offering highest interest rates. Currently, many small finance banks are offering the highest interest rates for as high as 9% for certain tenures.
What are Small Finance Banks?
Small Finance Bank (SFB) is a banking segment exclusively created by the RBI to aid financial inclusion by offering basic banking services to underserved and un-served sections of society. Micros and small industries, small and marginal farmers, small business units, and people employed in the unorganized sector are target customers of SFBs.
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Given below are the FD interest rates of small finance banks.
The table shows below the highest interest rate offered by these banks and its corresponding tenure. The table also shows FD interest rate offered on one-year tenure.
| Bank Name | Interest Rates (p.a.) | ||
| Highest FD interest rate and tenure | 1-year FD interest rate (%) | ||
| % | Tenure | ||
| AU Small Finance Bank | 8.1 | 18 months | 7.25 |
| Equitas Small Finance Bank | 8.25 | 888 days | 8.1 |
| ESAF Small Finance Bank | 8.38 | 888 days | 6 |
| Jana Small Finance Bank | 8.25 | 1 year to 3 years | 8.25 |
| NorthEast Small Finance Bank | 9 | 18 months 1 day to 36 months | 7 |
| Suryoday Small Finance Bank | 8.6 | 5 years | 8.25 |
| Ujjivan Small Finance Bank | 8.25 | 18 months | 8.1 |
| Unity Small Finance Bank | 9 | 1001 days | 7.85 |
| Utkarsh Small Finance Bank | 8.5 | 2 years to 3 years; 1500 days | 8 |
Source: Paisabazaar data as on March 5, 2025
Unity Small Finance Bank and NorthEast Small Finance Banks are offering the highest interest rate on fixed deposits among the small finance banks. Unity Small Finance Bank is offering the highest interest rate among small finance banks. The bank is offering 9% per annum for 1001 days. The Unity Small Finance Bank is offering one-year FD rate of 7.85% per annum.
Also read: Investors can still get 8.5% interest on this FD tenure despite DCB Bank cutting interest rate
Similarly, NorthEast Small Finance Bank gives a 9% per annum interest rate for a tenure of 18 months 1 day to 36 months. However, one-year FD is offering 7% per annum as interest rate on fixed deposits.
Suryoday Small Finance Bank is offering 8.6% per annum for 5 years, and 8.25% per annum for one-year FD deposit.
Utkarsh Small Finance Bank gives 8.5% per annum for tenures between 2 to 3 years or 1500 days, while its 1-year FD interest rate is 8% per annum.
ESAF Small Finance Bank offers the highest rate of 8.38% for 888 days, but a lower 1-year FD interest rate of 6% per annum.
Three banks are offering the highest interest rate of 8.25% per annum.
Equitas Small Finance Bank is offering maximum FD interest of 8.25% per annum for 888 days, with a 1-year FD interest rate of 8.1% per annum.
Jana Small Finance Bank provides 8.25% per annum for a period ranging from 1 to 3 years, which is also its 1-year FD interest rate.
Ujjivan Small Finance Bank provides 8.25% per annum for 18 months, and 8.1% per annum for a 1-year FD deposit.
AU Small Finance Bank is offering the highest interest rate of 8.1% per annum for an 18-month tenure. However, the one-year FD interest rate of the bank is 7.25% per annum.\
How safe are Small Finance Banks?
According to the AU Small Finance Bank, “Like other types of banks in India, the RBI regulates and governs SFBs. Therefore, all the banking norms, such as Statutory Liquidity Ratio Requirements, Cash Ratio Reserve Requirements, etc., apply to them. Moreover, the RBI also defines aspects like Eligibility Criteria and Mandatory Promoter Contribution for SFBs.” Note that the small finance banks are covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC). This means that bank deposits of up to Rs 5 lakh are covered under the DICGC.
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