Banks compete for deposits by hiking FD interest rates

In a bid to attract more deposits, banks have begun offering higher interest rates on fixed deposits (FDs). Leading players such as State Bank of India (SBI) and HDFC Bank initiated this trend, with smaller banks like IDBI Bank quickly following suit to stay competitive.

Special Schemes for Seniors

SBI has introduced a new category for "super senior citizens" aged 80 and above, offering an additional 10 basis points on top of the regular senior citizen FD rates. IDBI Bank has mirrored this initiative with its 'IDBI Chiranjeevi-Super Senior Citizen FD,' exclusively for individuals aged 80 and above. This scheme provides an extra 0.65% interest above the standard rates.

Under the IDBI scheme, customers can earn:

8.05% for a 555-day tenure,

7.9% for 375 days,

8% for 444 days, and

7.85% for 700 days.

The scheme became effective on January 13, 2025.

New Savings Options

SBI has also launched an innovative recurring deposit scheme called 'Har Ghar Lakhpati' to help individuals accumulate a corpus of ₹1 lakh or more through small monthly savings over three to ten years.

Eligibility:

Individuals, including minors aged 10 and above, can open an account.

Interest rates range from 6.75% to 6.50% for those under 60 and 7.25% to 7% for senior citizens, depending on the tenure.

Bank of Baroda’s Flexible FD

Bank of Baroda has introduced liquid fixed deposits, allowing customers to withdraw funds in units of ₹1,000 after an initial deposit of ₹5,000. Subsequent deposits must also be in multiples of ₹1,000.

Government Push

Finance Minister Nirmala Sitharaman recently urged public sector banks to accelerate deposit growth to keep pace with the rapid rise in credit demand. The current deposit growth rate, lagging behind credit growth by 3–4%, risks creating an asset-liability mismatch in the banking system.

As competition among banks intensifies, these innovative schemes are reshaping the savings landscape, offering customers better returns and more flexibility.