One-Year FD Interest – In 2025, fixed deposits (FDs) remain one of the most preferred investment options among conservative investors in India. With interest rates shifting in response to RBI policy changes and inflation trends, many banks have revised their 1-year FD rates. If you’re planning to park your savings for a short-term period and want assured returns, it’s crucial to compare which bank currently offers the best FD interest rates for a 1-year tenure. Let’s break down the latest FD rates across top banks in India and help you make an informed decision.
Why 1-Year FD is a Popular Choice
A 1-year Fixed Deposit (FD) is a popular investment option because it offers guaranteed returns with minimal risk, making it ideal for short-term financial goals. It provides better interest rates than a regular savings account while maintaining liquidity and flexibility. Investors also prefer it due to easy premature withdrawal options and predictable returns without exposure to market fluctuations.
A 1-year FD offers both safety and liquidity, making it an ideal option for risk-averse investors. Here’s why it’s preferred:
- Fixed and guaranteed returns
- Low-risk compared to equities or mutual funds
- Suitable for short-term financial goals
- Easy premature withdrawal in emergencies
- Tax Deducted at Source (TDS) applicable beyond ₹40,000 (₹50,000 for senior citizens)
Top Banks Offering Highest 1-Year FD Interest Rates in 2025
Top banks in 2025 offering the highest 1-year FD interest rates include Yes Bank (7.25%), RBL Bank (7.10%), and IndusInd Bank (7.00%) for regular customers. Senior citizens get even better returns, with rates going up to 7.75% in some banks. These short-term FDs provide safe and fixed returns, making them ideal for investors looking to grow their savings with minimal risk. Always compare rates, withdrawal rules, and bank credibility before investing.
Below is a comparison of 1-year FD interest rates offered by leading public and private sector banks as of May 2025:
1-Year FD Interest Rates (General Public)
| Bank Name | Interest Rate (1 Year) | Senior Citizen Rate | Minimum Deposit | Maximum Deposit | Premature Withdrawal | Tax Saver Option |
|---|---|---|---|---|---|---|
| Yes Bank | 7.25% | 7.75% | ₹10,000 | ₹5 Cr | Yes | No |
| RBL Bank | 7.10% | 7.60% | ₹1,000 | ₹2 Cr | Yes | No |
| IndusInd Bank | 7.00% | 7.50% | ₹10,000 | ₹2 Cr | Yes | No |
| ICICI Bank | 6.70% | 7.20% | ₹10,000 | ₹2 Cr | Yes | Yes |
| HDFC Bank | 6.60% | 7.10% | ₹5,000 | ₹1 Cr | Yes | Yes |
| SBI | 6.30% | 6.80% | ₹1,000 | ₹2 Cr | Yes | Yes |
| Bank of Baroda | 6.25% | 6.75% | ₹1,000 | ₹2 Cr | Yes | Yes |
Highest 1-Year FD Interest for Senior Citizens
For senior citizens, FD rates are generally 0.50% higher than regular rates. Here’s a look at the best options in 2025:
1-Year FD Interest Rates (Senior Citizens)
| Bank Name | Senior Citizen Rate | Regular Rate | Special Notes |
|---|---|---|---|
| Yes Bank | 7.75% | 7.25% | Among highest for seniors |
| RBL Bank | 7.60% | 7.10% | Offers flexible tenure options |
| IndusInd Bank | 7.50% | 7.00% | No penalty on premature closure (conditions apply) |
| ICICI Bank | 7.20% | 6.70% | Allows online booking with extra benefits |
| SBI | 6.80% | 6.30% | Trusted public sector bank |
Factors to Consider Before Investing in a 1-Year FD
Before locking your funds in any fixed deposit scheme, consider the following factors:
- Liquidity Needs : Ensure you won’t need the money within a year.
- Interest Payout Frequency : Choose between monthly, quarterly, or cumulative payouts.
- Premature Withdrawal Rules : Some banks charge a penalty on early closure.
- Tax Implications : Interest is fully taxable; submit Form 15G/15H to avoid TDS.
- Bank Credibility : Prefer banks with high CRAR and credit ratings for large amounts.
Private vs Public Sector Banks – Which One is Better?
While private banks offer higher interest rates, public sector banks bring the advantage of trust and stability. Your choice should depend on your priorities:
- Choose Private Banks: If your goal is to earn higher interest in short-term.
- Choose Public Banks: If you prefer long-standing reputation, safer environment.
- Go with Small Finance Banks (e.g., AU, Jana, Ujjivan): If you’re comfortable with smaller institutions offering rates over 7.5% (verify deposit insurance coverage).
Latest Trends in FD Interest Rates – 2025
- RBI has kept repo rates unchanged for the past two quarters, causing minimal rate movement.
- Small finance and new-age private banks are offering competitive rates to attract deposits.
- Interest rates for short-term FDs (1 year) remain higher than long-term FDs in some banks, making it a good time for short-term investments.
Repo Rate and Inflation Trend Impact
| Month (2025) | RBI Repo Rate | Retail Inflation (%) | FD Rate Trend |
|---|---|---|---|
| January | 6.50% | 5.1% | Stable |
| March | 6.50% | 5.0% | Slight Rise |
| May | 6.50% | 5.3% | Steady |
How to Open a 1-Year FD in 2025
Opening a fixed deposit has never been easier. You can book it both online and offline.
Online Mode:
- Log in to your bank’s mobile or net banking platform
- Choose ‘Open Fixed Deposit’
- Enter deposit amount, tenure (1 year), and interest payout type
- Confirm and submit
Offline Mode:
- Visit the nearest bank branch
- Fill out the FD application form
- Submit KYC documents and deposit amount (cheque/cash)
- Collect FD receipt or acknowledgement
In 2025, Yes Bank, RBL Bank, and IndusInd Bank lead the chart for highest 1-year FD interest rates. While private banks offer better returns, always check terms and deposit safety. If you’re a senior citizen, leverage the additional interest rate benefits. Remember to align your investment with your financial goals, and consider breaking up large deposits across banks to stay within the ₹5 lakh DICGC insurance limit.
FAQs
Q1. Which bank is currently offering the highest 1-year FD interest rate in 2025?
Yes Bank is currently offering the highest rate at 7.25% for general investors and 7.75% for senior citizens.
Q2. Is it safe to invest in private banks for higher FD returns?
Private banks are safe if regulated by RBI and deposits are insured up to ₹5 lakh. Always check the financial health of the bank before investing.
Q3. What is the minimum deposit amount to start a 1-year FD?
It varies by bank, but most banks allow a minimum deposit starting from ₹1,000 to ₹10,000.
Q4. Are 1-year FD returns taxable?
Yes, FD interest is taxable. TDS is deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens).
Q5. Can I break my 1-year FD before maturity?
Yes, premature withdrawal is allowed in most banks but may attract a penalty and lower interest payout.