Senior citizen fixed deposit (FD) rates in May 2026 are offering returns as high as 8.75% annually, with small finance banks continuing to dominate the high-yield deposit segment amid elevated interest rates and strong competition for deposits. 

Banks and NBFCs are currently offering FD interest rates ranging from around 7% to over 8% for senior citizens across tenures spanning seven days to 10 years. Most lenders continue to provide an additional 50 basis points over standard FD rates for senior citizen depositors, while some banks are offering extra premiums under special deposit schemes. 

Among public sector banks, Punjab & Sind Bank is offering one of the highest slab rates at 7.25% for senior citizens. Bank of Maharashtra follows with rates up to 7.15%, while State Bank of India (SBI), Bank of India, Canara Bank, Indian Bank, Indian Overseas Bank, Punjab National Bank, and Union Bank of India are offering rates around 7.05%-7.10% on select tenures. 

SBI’s “We-Care” FD scheme continues to remain popular among retirees. Under the scheme, the bank offers an additional premium of 50 basis points over and above the standard senior citizen benefit for deposits with tenures ranging from five to 10 years. 

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Private sector banks are offering comparatively higher returns to attract depositors. SBM Bank currently offers one of the highest FD rates among private lenders at 8.35% for senior citizens. YES Bank and Bandhan Bank are offering rates up to 7.75%, while RBL Bank provides rates of up to 7.70%. IDFC FIRST Bank and IndusInd Bank are also offering rates of 7.50% or higher on select maturities. 

ICICI Bank has continued its special senior citizen FD scheme, under which customers receive an additional 10 basis points over the standard 50 basis points senior citizen premium for deposits between 15 months and less than 18 months. 

Small finance banks remain the clear leaders in terms of returns. ESAF Small Finance Bank currently offers up to 8.50% interest for senior citizens, while Suryoday Small Finance Bank offers up to 8.25%. Shivalik Small Finance Bank is offering rates up to 8.30%, and Jana Small Finance Bank, Equitas Small Finance Bank, Unity Small Finance Bank, and Utkarsh Small Finance Bank are offering rates around 8%. 

FDs in your portfolio

Financial planners say senior citizens continue to prefer fixed deposits because of stable returns, capital protection, and predictable income, especially during periods of market volatility and uncertainty in equities.

However, experts caution investors against focusing solely on the highest available interest rates. Deposit safety, liquidity requirements, tenure alignment, and bank credibility should also be considered before investing large sums in high-yield FDs.

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Under current rules, deposits up to ₹5 lakh per depositor per bank are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), offering an additional layer of protection for retail investors.

Experts also believe current FD rates may represent an attractive locking opportunity for retirees if interest rates soften later in the year due to possible monetary easing by the Reserve Bank of India. For senior citizens seeking regular income, staggered FD investments across different maturities and banks may help optimise liquidity, manage reinvestment risk, and improve overall portfolio stability.

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Published on: May 7, 2026 6:35 AM IST