Select banks are offering these peak five-year interest rates to senior citizens on deposit amounts up to Rs 3 crore. Although the Deposit Insurance Credit Guarantee Corporation protects balances up to Rs 5 lakh in small finance banks, keeping exposures within this limit mitigates institutional risk. Furthermore, while the Section 87A rebate eliminates tax liabilities for incomes up to Rs 12 lakh under the new regime, banks will still deduct tax at source if yearly interest tops Rs 1 lakh. Senior citizens must submit Form 121 to halt these automated deductions if their overall estimated tax liability is zero.
Key points
Investors should limit exposures in small finance banks to the Rs 5 lakh insured cap to m…: Investors should limit exposures in small finance banks to the Rs 5 lakh insured cap to manage potential risks.
Banks mandate tax deduction at source once annual interest earnings for senior citizens e…: Banks mandate tax deduction at source once annual interest earnings for senior citizens exceed the Rs 1 lakh threshold.
Eligible depositors with nil tax liability must submit Form 121 to prevent tax deductions…: Eligible depositors with nil tax liability must submit Form 121 to prevent tax deductions but may still need to file returns.
Sources checked by our analysis pipeline: 1
A few banks are still offering interest rates as high as 8.6% on fixed deposits (FDs) for senior citizens (aged 60 years and above) for a five-year term, for deposits up to Rs 3 crore.
Check out the list below to find out which banks provide FD interest rates that hit 8.6% for senior citizens.
Source: paisabazaar.com as of November 4, 2026
Disclaimer: While deposits in small finance banks are insured by the Deposit Insurance Credit Guarantee Corporation (DICGC) up to Rs 5 lakh, experts advise investors to exercise caution when investing in their FDs. Given their unique business model, the risk associated with investing in small finance bank FDs might differ slightly from that of scheduled commercial banks. To mitigate potential risks, it's recommended that investors limit their exposure to small finance bank FDs to an amount that falls within the DICGC coverage. This ensures that their principal and interest are protected in unforeseen circumstances.
For example, if a senior citizen has an income of Rs 11 lakh, they won’t have to pay income tax thanks to the Section…
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