One Year FD – In today’s uncertain economic environment, fixed deposits (FDs) continue to be a safe and reliable investment option for conservative investors. Especially for short-term goals, a 1-year FD offers guaranteed returns with minimal risk. With multiple banks revising their interest rates in 2025, investors are keen to know which bank is currently offering the highest return on 1-year fixed deposits. Let’s take a detailed look at the latest FD interest rate trends, top-performing banks, and things you should consider before locking in your money.
Why One Year FD Are in Demand Right Now
One-year fixed deposits have become increasingly popular among investors in 2025 due to their perfect balance of safety, liquidity, and attractive interest rates. With rising inflation and uncertainty in the stock markets, many individuals are choosing short-term FDs to secure their money without locking it away for too long. Additionally, banks are offering competitive rates on 1-year tenures, making them an ideal option for those seeking stable and risk-free returns in the short run.
- Guaranteed returns amid market volatility
- Ideal for short-term savings goals
- Flexibility to renew or withdraw after maturity
- Tax-saving benefits under certain schemes (for senior citizens)
- Competitive rates offered by smaller and private banks
Top Banks Offering Highest Interest Rates on 1-Year FDs (May 2025)
Leading banks in India have recently updated their fixed deposit rates, making 1-year FDs an attractive short-term investment option. As of May 2025, several private and public sector banks are offering competitive interest rates, especially for senior citizens. While large banks like SBI, ICICI, and HDFC offer stable returns with high credibility, private players such as IndusInd Bank and RBL Bank are offering the highest rates in this segment, providing a perfect mix of returns and security for investors.
Here is a comparison of the latest FD interest rates offered by top Indian banks for a 1-year term. These include both public and private sector banks.
1-Year FD Interest Rate Comparison Table
| Bank Name | Regular Rate (1-Year) | Senior Citizen Rate | Minimum Deposit | Premature Withdrawal | Compounding Frequency | Rating | Safety Level |
|---|---|---|---|---|---|---|---|
| IndusInd Bank | 7.90% | 8.40% | ₹10,000 | Allowed | Quarterly | CRISIL AA+ | High |
| RBL Bank | 7.85% | 8.35% | ₹1,000 | Allowed | Quarterly | ICRA A+ | Moderate |
| Yes Bank | 7.75% | 8.25% | ₹10,000 | Allowed | Quarterly | CARE A | Moderate |
| ICICI Bank | 6.60% | 7.10% | ₹10,000 | Allowed | Quarterly | CRISIL AAA | Very High |
| HDFC Bank | 6.55% | 7.05% | ₹5,000 | Allowed | Quarterly | CRISIL AAA | Very High |
| SBI (State Bank of India) | 6.80% | 7.30% | ₹1,000 | Allowed | Quarterly | CRISIL AAA | Very High |
| Axis Bank | 6.75% | 7.25% | ₹5,000 | Allowed | Quarterly | CRISIL AAA | Very High |
| IDFC FIRST Bank | 7.00% | 7.50% | ₹5,000 | Allowed | Quarterly | ICRA AA | High |
Small Finance Banks Offering Even Higher Returns
If you’re open to lesser-known banks regulated by the RBI, small finance banks may offer significantly higher FD rates compared to traditional institutions.
Small Finance Bank FD Rates – May 2025
| Bank Name | Regular Rate (1-Year) | Senior Citizen Rate | Safety Rating | Premature Exit | Min Deposit |
|---|---|---|---|---|---|
| Fincare Small Finance | 8.25% | 8.75% | Stable | Allowed | ₹5,000 |
| Jana Small Finance | 8.10% | 8.60% | Stable | Allowed | ₹1,000 |
| AU Small Finance | 7.95% | 8.45% | Stable | Allowed | ₹1,000 |
| Suryoday SFB | 7.90% | 8.40% | Stable | Allowed | ₹1,000 |
These banks are safe as they are under RBI regulation and deposits up to ₹5 lakh are insured by DICGC.
Key Points to Consider Before Investing in a One Year FD
- Compare rates from multiple banks before investing.
- Check the credibility of small finance and private banks.
- Understand withdrawal penalties for early exit.
- Senior citizens should always opt for special FD schemes.
- Interest payout options – monthly, quarterly, or cumulative.
- Tax implications on the earned interest.
- Auto-renewal features and flexibility at maturity.
Who Should Invest in a 1-Year FD?
- Those looking for safe short-term investments.
- Retired individuals seeking assured income.
- Salaried professionals with surplus monthly income.
- Individuals saving for a short-term goal (travel, gadget, insurance premium, etc.).
- People avoiding market-linked volatility.
Taxation on FD Interest Income
- FD interest is added to your total income and taxed as per your income slab.
- Banks deduct TDS at 10% if interest exceeds ₹40,000 (₹50,000 for senior citizens) in a year.
- Submit Form 15G/15H to avoid TDS if your income is below taxable limit.
Tips to Maximize FD Returns
- Choose small finance banks if comfortable with moderate risk and want higher returns.
- Ladder your investments – split FDs into different tenures.
- Use online FD calculators to plan maturity and post-tax returns.
- Reinvest interest for compounding benefits.
- Explore special tenure offers around festivals or quarter ends.
1-year fixed deposits are one of the most popular investment instruments in India due to their safety, simplicity, and steady returns. As of May 2025, IndusInd Bank and several small finance banks like Fincare and Jana SFB are offering the highest interest rates on 1-year FDs. However, while returns are important, it’s equally crucial to assess bank stability, withdrawal flexibility, and post-tax yield.
FAQs about One Year FD
Q1. Which bank gives the highest interest rate on a 1-year FD currently?
IndusInd Bank currently offers one of the highest interest rates at 7.90% for regular customers and 8.40% for senior citizens.
Q2. Are small finance banks safe for FDs?
Yes, small finance banks are regulated by the RBI and deposits up to ₹5 lakh are insured by DICGC.
Q3. Is FD interest taxable?
Yes, FD interest is taxable as per your income slab. TDS applies if the interest exceeds ₹40,000 in a financial year.
Q4. Can I break my FD before maturity?
Yes, most banks allow premature withdrawal but may charge a penalty or offer lower interest.
Q5. How can I choose the best FD for one year?
Compare interest rates, assess bank safety, check withdrawal rules, and calculate post-tax returns before investing.