SCSS vs Senior Citizen Bank FDs: Which offers the highest interest rate?
Senior citizens should choose suitable investment options while planning their retirement funds to ensure a steady income and the safety of their capital. The government-backed Senior Citizen Savings Scheme (SCSS) and bank-offered Senior Citizen Fixed Deposits (FDs) are two popular choices for senior citizens in India. Both offer security and favourable interest rates; however, their benefits, flexibility, and returns vary. Here is a quick comparison of interest rates, tax benefits, and deposit limits for SCSS and bank fixed deposits for senior citizens.
Interest rate comparison of SCSS and Senior Citizen FDs:
Senior Citizen FD Rates in 2025
Suryoday Small Finance Bank offers the highest interest rate of 9.10% on a 5-year FD, followed by Unity Small Finance Bank at 8.65% and NorthEast Small Finance Bank at 8.50%—much higher than the SCSS offered rate of 8.2%. YES Bank and SBM Bank India offer an interest rate of 8.25%, while state-owned State Bank of India offers 7.50%, and Bank of Baroda provides a 7.40% interest rate on a 5-year FD.
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Senior Citizen FD Table
Senior Citizen FD Table
Bank Name
Additional rates offered to Super Senior Citizen* (over and above to senior citizen rates)
5-year tenure (%)
SMALL FINANCE BANKS
AU Small Finance Bank
7.75
---
Equitas Small Finance Bank
7.75
---
ESAF Small Finance Bank
6.50
---
Jana Small Finance Bank
8.20
---
NorthEast Small Finance Bank
8.50
---
Suryoday Small Finance Bank
9.10
---
Ujjivan Small Finance Bank
7.70
---
Unity Small Finance Bank
8.65
---
Utkarsh Small Finance Bank
8.25
---
PRIVATE SECTOR BANKS
Axis Bank
7.65
---
Bandhan Bank
6.60
---
City Union Bank
6.50
0.10% on 365 days; 0.05% on 366 days to 3 years tenure
CSB Bank
6.25
---
DBS Bank
7.00
---
DCB Bank
7.75
---
Federal Bank
7.40
---
HDFC Bank
7.25
---
ICICI Bank
7.40
---
IDFC FIRST Bank
6.50
---
IndusInd Bank
7.60
---
Jammu & Kashmir Bank
7.00
---
Karur Vysya Bank
7.40
---
Karnataka Bank
6.90
---
Kotak Mahindra Bank
6.70
---
RBL Bank
7.60
0.25% on all tenures
SBM Bank India
8.25
---
South Indian Bank
6.50
---
Tamilnad Mercantile Bank
7.00
---
YES Bank
8.25
---
PUBLIC SECTOR BANKS
Bank of Baroda
7.40
0.10% on tenures of above 1 year to 5 years
Bank of India
6.75
0.15% on tenures of 180 days to 10 years
Bank of Maharashtra
7.00
---
Canara Bank
7.20
0.10% on tenure of 444 days
Central Bank of India
7.25
---
Indian Bank
6.75
0.25% on all tenures
Indian Overseas Bank
7.00
0.25% on all tenures
Punjab National Bank
6.75
0.30% for tenures up to 5 years
Punjab & Sind Bank
7.00
0.15% on tenure of 333 days, 444 days, 555 days, 777 days, 999 days & PSB Green Earth (22 months, 44 months, 66 months)
State Bank of India
7.50
0.10% on all tenures
Union Bank of India
7.00
0.25% on all tenures
Source: Paisabazaar data as on May 7, 2025
SCSS Interest Rate in 2025
The Senior Citizen Savings Scheme (SCSS) is one of the popular post office schemes that offers a fixed interest rate of 8.2% per annum for the first quarter of FY 2025-26, applicable from April to June 2025. This rate is compounded and paid quarterly, providing a steady income stream for senior citizens. The current rate of 8.2% remains competitive compared to most major banks' FD offerings but is lower than the rates offered by some small finance banks like SSFB.
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Safety and Security
Senior Citizen Fixed Deposits: FDs are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5 lakh, which includes both principal and interest, ensuring their safety. However, FDs that exceed Rs 5 lakh carry some risk in case of bank failure.
SCSS: The scheme is fully backed by the Government of India, offering superior safety for the entire investment (up to Rs 30 lakh).
Tax Benefits
Senior Citizen FDs: Tax-saving FDs (5-year tenure) qualify for Section 80C deductions up to Rs 1.5 lakh, and the TDS exemption limit for FY 2025-26 is Rs 1 lakh. Interest above these limits is taxable per the individual's slab.
SCSS: Also qualifies for Section 80C deductions up to Rs 1.5 lakh. Interest is taxable, with TDS deducted if annual interest exceeds Rs 1 lakh. Both options are similar in tax treatment, but SCSS's quarterly interest payments may lead to earlier tax implications.
Deposit limits
Senior Citizen FDs: No upper limit, allowing senior citizens to invest any amount, though rates may vary for bulk deposits (e.g., above Rs 3 crore). Splitting large sums across multiple banks can maximise DICGC coverage.
SCSS: Capped at Rs 30 lakh per individual across all accounts, limiting its use for those with larger savings.
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