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Time of India

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. FD interest rate up to 9.10%: This bank hikes fixed deposit interest rates by 41 bps; Check details here 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. Federal Bank new service charges: Check latest ATM charges, cash deposit charges, locker rent and more changes from June 1, 2025 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.