Big and relief news has come from the banking sector for senior citizens looking for safe investment and regular income. The country's major commercial banks, private lenders and small finance banks (SFBs) have made major revisions in their fixed deposit (FD) interest rates. After the new changes, senior citizens are now getting the opportunity to earn annual interest up to 8.50%. For elderly investors who want maximum returns on their deposits after retirement without any market risk, this time can prove to be the best opportunity to lock their FD at attractive interest rates. Dominance of small finance banks: Highest returns up to 8.50% Small finance banks have gone ahead in giving highest interest on FD to senior citizens: ESAF Small Finance Bank: The bank has increased its retail FD rates to 8.50% for senior citizens. This highest rate is being given on deposits with special tenure of 800 days. Apart from this, senior citizens are also getting excellent interest of up to 8.25% on tenure of 2 years to 3 years. Unity Small Finance Bank: Unity Small Finance Bank is offering the highest interest rates to senior citizens ranging from 8.00% to over 9% on a tenure of 1001 days. Utkarsh Small Finance Bank: In Utkarsh Small Finance Bank, senior citizens are getting an attractive rate of 8.00% on Domestic Fixed Deposit with a tenure of 2 years to 3 years (730 days to 1095 days). Slice Small Finance Bank: The bank has revised its interest rates, under which interest at the rate of 7.75% is being given to senior citizens for a period ranging from 18 months 1 day to 24 months. Profits also increased in private and government banks: New rates of HDFC, Federal and SBI. Big commercial and private banks have also changed the interest rates on selected tenures to retain their customers: HDFC Bank: HDFC, the country's largest private bank, has revised its FD rates. Senior citizens are getting a maximum interest of 7.10% on tenures ranging from 3 years 1 day to 4 years 7 months, while the rate of 6.95% is applicable on tenures ranging from 18 months to 3 years. Federal Bank: Federal Bank has introduced a new 48-month special tenure, offering an annual interest rate of 7.20% to senior citizens. Whereas 7.15% interest is available on FD of 15 months. IndusInd Bank & Yes Bank: In IndusInd Bank and Yes Bank, senior citizens are getting rates up to 7.75% on maturity of 2 to 3 years. State Bank of India (SBI) & PNB: In the country's largest government bank SBI, senior citizens are getting interest up to 7.05% under special schemes like Wecare and Amrit Vrishti. Whereas Punjab National Bank (PNB) is giving returns of up to 7.10% on a period of 444 days. Super Senior Citizens getting additional benefit of up to 0.75% Senior citizens aged 60 years and above get additional interest of 0.50% (50 basis points) compared to normal customers. Many banks (like Indian Bank, RBL Bank and DCB Bank) have run special schemes for 'Super Senior Citizens' above 80 years of age. Super senior citizens are being given additional interest ranging from 0.75% to 0.85% compared to normal rates, taking their total earnings beyond 8%. Is your money deposited in small finance banks safe? This question arises in the minds of many investors whether it is safe to invest money in small finance banks due to higher interest rates. As per the rules of Reserve Bank of India (RBI), all scheduled commercial banks and scheduled small finance banks are covered under DICGC (Deposit Insurance and Credit Guarantee Corporation). Under this, the principal amount and interest up to Rs 5 lakh per depositor in every bank is completely insured and protected. If investors invest their funds by dividing them in pieces of Rs 5 lakh each in different small finance banks, then their entire capital can earn maximum interest while remaining 100% safe. Tax rules for senior citizens and role of Form 15H Under Section 80TTB of the Income Tax Act, senior citizens above 60 years of age get tax exemption on interest up to Rs 50,000 received from bank and post office FDs. Banks deduct 10% TDS only if the total interest income in the financial year exceeds Rs 50,000. Senior citizens whose total annual income is less than the taxable limit can completely avoid deducting TDS by submitting Form 15H in the bank. Keep these things in mind while choosing FD: While investing retirement funds, do not just look at the highest interest rate, but also assess your liquidity needs. If you need regular income like monthly or quarterly pension, choose the 'Regular Interest Payout' option. If the money is not needed immediately, choose the 'cumulative (compounding)' option to get a bigger fund by adding interest on interest on maturity. Also, to avoid any emergency, instead of investing the entire amount in a single long-term FD, use the 'FD laddering' technique, in which several small FDs maturing at different times are made.
