Top Fixed Deposit Rates: Enjoy Up to 9% Despite 1% RBI Rate Cut
Despite a significant reduction in the Reserve Bank of India’s repo rate by 100 basis points since February 2025, several small finance banks continue to offer competitive fixed deposit (FD) rates exceeding 8% for deposits under Rs 3 crore. While many banks have adjusted their interest rates downward in response to the policy changes, investors still have the opportunity to secure favorable rates before any further declines. Slice Small Finance Bank leads the pack with an impressive 9% FD interest rate for specific tenures.
Current Fixed Deposit Rates
As of June 18, 2025, Slice Small Finance Bank is offering the highest FD interest rate of 9% for general depositors, applicable for tenures ranging from 18 months and 1 day to 18 months and 2 days. Following closely is Unity Small Finance Bank, which provides an attractive rate of 8.60% for a tenure of 1001 days. Suryoday Small Finance Bank also presents a competitive option, offering 8.40% for deposits with tenures exceeding 30 months and up to 3 years.
Utkarsh Small Finance Bank is another notable contender, offering a peak rate of 8.25% for deposit tenures between 2 and 3 years. Lastly, Jana Small Finance Bank provides an 8.20% return on fixed deposits with a tenure of 5 years. These rates reflect the banks’ strategies to attract depositors amidst a changing interest rate environment.
Comparison of Small Finance Banks
The landscape of small finance banks (SFBs) differs significantly from that of commercial banks, despite both being regulated by the Reserve Bank of India (RBI). Commercial banks are larger institutions that cater to a broad customer base, offering a wide range of financial services, including various loan products. In contrast, small finance banks focus primarily on providing essential loan facilities such as personal loans, gold loans, and loans for micro, small, and medium enterprises (MSMEs). Their target demographic includes small borrowers and micro-entrepreneurs, particularly in underserved regions.
Both types of banks offer remittance services and access to digital banking platforms. However, the capital requirement for establishing a commercial bank is considerably higher, necessitating a minimum capital of Rs 100 crore, compared to the lower threshold for small finance banks.
Investment Considerations
Investors considering deposits in small finance banks should exercise caution due to the higher risk profiles associated with these institutions compared to traditional commercial banks. Banking analysts highlight the importance of understanding the distinct business models of SFBs, which may expose depositors to increased risk. Although the Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance coverage of up to Rs 5 lakh for all deposits, the operational frameworks of small finance banks differ from those of scheduled commercial banks, potentially impacting the safety of deposits.
As the interest rate landscape continues to evolve, investors are encouraged to stay informed about the offerings from various banks. The current competitive rates from small finance banks present an opportunity for those seeking higher returns on their fixed deposits, but careful consideration of the associated risks is essential.
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