Author: Ankur Jhavery

Found a better interest rate at another bank and wondering if you can transfer your fixed deposit? While you cannot directly transfer an FD from one bank to another like you transfer a bank account, there are smart ways to move your money to get better returns. This guide explains your options and how to execute the switch efficiently.

Can You Directly Transfer an FD Between Banks?

The short answer is no. Fixed deposits cannot be transferred directly from one bank to another. An FD is a contract between you and a specific bank for a specific tenure and interest rate. There is no mechanism like AEPS or NEFT that allows FD portability between banks.

However, you can effectively move your money by closing the FD at the old bank and opening a new one at the new bank. The key is to do this strategically to minimize losses and maximize gains.

How to Move Your FD to Another Bank

Step 1: Compare Interest Rates

Before making any move, calculate whether switching actually benefits you. Consider:

• The interest rate at your current bank vs the new bank.
• The premature withdrawal penalty at your current bank (typically 0.5-1%).
• The remaining tenure of your current FD.
• The net benefit after accounting for the penalty.

Step 2: Calculate the Break-Even

Here is a practical example:

• Current FD: Rs 5 lakh at 6.5% for 3 years (1 year completed, 2 years remaining).
• New bank offers: 7.5% for 2 years.
• Premature closure penalty: 1% (effective rate for 1 year at old bank becomes 5.5%).
• Interest lost due to penalty on 1 year: approximately Rs 5,000.
• Extra interest earned at new bank over 2 years: approximately Rs 10,000.
• Net benefit: Rs 5,000 — it makes sense to switch.

If the rate difference is small (0.25% or less), it may not be worth switching after accounting for the penalty.

Step 3: Close the FD at Your Current Bank

Follow the premature closure process:

• Online: Log in to net banking, go to FD section, select “Premature Closure,” review the penalty, and confirm.
• Offline: Visit the branch with your FD receipt, fill out the closure form, and submit.

The maturity amount (with reduced interest and penalty deducted) will be credited to your savings account.

Step 4: Transfer Funds to the New Bank

Transfer the closed FD amount from your savings account to your account at the new bank using NEFT, RTGS, or IMPS. For large amounts (above Rs 2 lakh), RTGS is the fastest option.

Step 5: Open a New FD at the New Bank

Log in to the new bank’s net banking or visit the branch. Open a fresh FD with the transferred amount at the new, higher interest rate. Choose your preferred tenure, payout option, and maturity instructions.

When Does It Make Sense to Switch?

• Significant rate difference: A difference of 1% or more usually justifies the switch, especially for long remaining tenures.
• Early in the FD tenure: Switching within the first few months minimizes the penalty impact.
• Large deposit amounts: Even a small rate difference becomes significant on large deposits. On Rs 10 lakh, a 0.5% difference means Rs 5,000 extra per year.
• Bank creditworthiness concerns: If your current bank is facing financial trouble, moving to a safer bank is prudent regardless of the rate.

When Should You NOT Switch?

• Close to maturity: If your FD matures in a few months, wait for maturity and then open at the new bank.
• Small rate difference: If the new rate is only 0.25% higher, the premature closure penalty will likely eat up the gains.
• Tax-saving FD: You cannot close a tax-saving FD before 5 years, so switching is not an option.
• Loan against FD: If you have an outstanding loan against the FD, you must repay the loan before closing the FD.

Switching FD Banks: A Checklist

1. Compare rates and calculate the net benefit after penalty.
2. Check if you have any loans or liens against the FD.
3. Ensure your KYC is complete at the new bank.
4. Close the FD at the old bank.
5. Transfer funds to the new bank.
6. Open the new FD immediately — do not leave money in savings account earning low interest.
7. Update your FD tracking records.

Special Cases

Transferring Within the Same Bank

If you want to move your FD from one branch to another within the same bank, this is possible without closing the FD. Visit either branch and request a branch transfer. Your FD terms remain unchanged.

Transferring FD Ownership

In some cases (such as inheritance or court orders), FD ownership can be transferred to another person within the same bank. This requires specific documentation including legal heir certificates or court orders.

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Looking for higher returns than what banks offer on fixed deposits? Corporate fixed deposits (Corporate FDs) might be the answer. Offered by Non-Banking Financial Companies (NBFCs) and corporations, these FDs typically offer 1-2% higher interest rates than bank FDs. But they also come with additional risks. This guide explains how to open a corporate FD, what to watch out for, and how to make smart choices.

What Is a Corporate Fixed Deposit?

A corporate FD is a fixed deposit offered by a company (usually an NBFC or a large corporation) directly to the public. Unlike bank FDs, corporate FDs are not insured by DICGC. The returns are higher because the risk is slightly higher. Companies use these deposits to raise funds for their business operations and lending activities.

Popular Corporate FD Providers

• Bajaj Finance: One of the most popular corporate FD providers with CRISIL AAA rating.
• Shriram Finance: Offers competitive rates, particularly for longer tenures.
• Mahindra Finance: Backed by the Mahindra Group with a strong credit rating.
• HDFC Ltd: A trusted name (now merged with HDFC Bank, but previously offered corporate FDs).
• PNB Housing Finance: Offers attractive rates for various tenures.

Corporate FD Interest Rates (2025)

Corporate FD rates typically range from 7.5% to 8.5% for regular customers and 8% to 9% for senior citizens, depending on the company and tenure. These rates are significantly higher than the 6-7.5% offered by most banks.

How to Open a Corporate FD Online

Step 1: Choose a Company

Select a corporate FD provider based on:

• Credit Rating: Only invest in FDs rated AAA, AA+, or AA by agencies like CRISIL, ICRA, or CARE. Avoid lower-rated companies.
• Interest Rate: Compare rates across companies for your desired tenure.
• Company Track Record: Stick to well-known companies with a long history of honouring deposits.

Step 2: Visit the Company’s Website

Go to the company’s official website and navigate to the “Fixed Deposits” section. Most large NBFCs have a seamless online application process.

Step 3: Fill in the Application Form

Enter your personal details:

• Full name, date of birth, and contact information
• PAN number (mandatory)
• Aadhaar number for KYC
• Bank account details for interest credits and maturity payout
• Nominee details

Step 4: Complete KYC

If you are a new customer, you will need to complete KYC verification. This can usually be done online through video KYC or by uploading documents (PAN, Aadhaar, address proof).

Step 5: Select Amount and Tenure

Choose the deposit amount and tenure. Minimum investments typically start at Rs 15,000 to Rs 25,000. Select between cumulative (reinvest interest) and non-cumulative (periodic interest payout) options.

Step 6: Make the Payment

Pay using net banking, UPI, or NEFT/RTGS. The FD is created once the payment is received and verified.

Step 7: Receive the FD Certificate

You will receive a digital FD certificate via email and in your online account with the company. This certificate contains all details — FD number, amount, rate, tenure, and maturity date.

Risks of Corporate FDs

• No DICGC Insurance: Unlike bank FDs, corporate FDs are not insured. If the company defaults, you could lose your money.
• Credit Risk: The company may face financial difficulties, especially during economic downturns.
• Liquidity Risk: Premature withdrawal from corporate FDs can be more restrictive than bank FDs.
• Regulatory Risk: NBFCs are regulated by the RBI, but the regulatory framework is less stringent than for banks.

How to Mitigate Risks

• Check Credit Ratings Regularly: A downgrade in credit rating is a red flag. Monitor the company’s rating at least annually.
• Diversify: Do not put all your money in one company’s FD. Spread across multiple issuers.
• Limit Exposure: Keep corporate FDs to a reasonable portion (20-30%) of your total FD portfolio. The rest should be in bank or post office FDs.
• Stick to AAA-Rated Companies: The extra 0.5% from a lower-rated company is not worth the risk.
• Read the Fine Print: Understand the premature withdrawal terms, penalty, and minimum lock-in period.

Corporate FD vs Bank FD

• Returns: Corporate FDs offer 1-2% higher returns.
• Safety: Bank FDs are safer due to DICGC insurance and RBI regulation.
• Convenience: Bank FDs are easier to manage, especially online.
• Tax Treatment: Both are taxed the same way — interest is added to your income and taxed at your slab rate.

Tax Implications

• Interest from corporate FDs is taxable as “Income from Other Sources.”
• TDS is deducted at 10% if interest exceeds Rs 5,000 per year (note: this threshold is lower than bank FDs).
• Submit Form 15G/15H to avoid TDS if eligible.

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Want regular income from your fixed deposits without sacrificing the higher interest rates that come with longer tenures? An FD ladder strategy is the answer. This smart investment approach divides your money across multiple FDs with staggered maturity dates, giving you the best of both worlds — liquidity and better returns. Here is how to set one up.

What Is an FD Ladder?

An FD ladder is a strategy where you invest in multiple fixed deposits with different maturity dates. Instead of putting all your money in one FD, you spread it across several FDs that mature at regular intervals — monthly, quarterly, or annually. This ensures you always have access to funds while still earning competitive interest rates on longer-term deposits.

Why Use an FD Ladder?

• Regular Liquidity: You have an FD maturing at regular intervals, providing access to cash without breaking any deposit prematurely.
• No Premature Withdrawal Penalty: Since FDs mature periodically, you rarely need to break one before its tenure ends.
• Higher Average Returns: By including longer-tenure FDs (which usually offer higher rates), your average return is higher than investing everything in short-term FDs.
• Interest Rate Risk Management: If rates go up, your maturing FDs can be reinvested at the new higher rate. If rates go down, your existing long-term FDs continue earning the locked-in higher rate.
• Perfect for Self-Employed: Freelancers and business owners with irregular income benefit greatly from having FDs mature at different times.

How to Set Up an FD Ladder: Step-by-Step

Step 1: Determine Your Total Investment Amount

Decide how much money you want to allocate to fixed deposits. For this example, let us say you have Rs 12 lakh to invest.

Step 2: Choose the Number of Rungs

Decide how many FDs you want (these are the “rungs” of your ladder). Common structures include:

• Monthly Ladder: 12 FDs maturing one each month. Best for monthly income needs.
• Quarterly Ladder: 4 FDs maturing one each quarter. Good for business cash flow planning.
• Annual Ladder: 5 FDs maturing one each year. Best for long-term growth with annual access.

Step 3: Create the Ladder

Annual Ladder Example (Rs 12 lakh):

• FD 1: Rs 2.4 lakh for 1 year
• FD 2: Rs 2.4 lakh for 2 years
• FD 3: Rs 2.4 lakh for 3 years
• FD 4: Rs 2.4 lakh for 4 years
• FD 5: Rs 2.4 lakh for 5 years

Step 4: Reinvest Maturing FDs

When the 1-year FD matures at the end of Year 1, reinvest it for 5 years. Now all your remaining FDs are one year closer to maturity, and you have a new 5-year FD. After 5 years, you will have five 5-year FDs, each maturing one year apart — giving you annual liquidity with 5-year rates.

Step 5: Maintain the Ladder

Every time an FD matures, either:

• Withdraw the money if you need it.
• Reinvest for the longest tenure in your ladder to maintain the structure.
• Add additional savings to grow your ladder over time.

Monthly FD Ladder for Regular Income

If you need monthly income, create 12 FDs with staggered maturities:

• FD 1: 1 month tenure (or 1 year, maturing in January)
• FD 2: 2 months tenure (or 1 year, maturing in February)
• … and so on until FD 12 maturing in December.

In practice, you would open all 12 FDs in the same month with tenures of 1 year, 1 year + 1 month, 1 year + 2 months, etc. After the first year, each month one FD matures, and you reinvest it for 12 months. This creates a perpetual monthly income stream.

FD Ladder for Self-Employed Individuals

If you are a freelancer, shopkeeper, or business owner, here is a tailored approach:

• Keep 3 months of expenses in savings: This is your emergency buffer.
• Create a quarterly ladder with the rest: Four FDs maturing every 3 months ensure you have access to capital for business needs.
• Match FD maturities to known expenses: If you pay GST quarterly, align an FD maturity with your GST payment date.

Advantages Over a Single Large FD

• A single Rs 12 lakh FD for 5 years earns more interest but offers zero liquidity for 5 years.
• Breaking that single FD attracts a penalty of 0.5-1%.
• With a ladder, you always have an FD maturing soon, eliminating the need for premature withdrawal.
• A ladder also protects you against interest rate changes in either direction.

Tips for Building a Better FD Ladder

• Use different banks for different rungs to maximize DICGC insurance coverage (Rs 5 lakh per bank).
• Mix cumulative and non-cumulative FDs based on your income needs.
• Automate renewal instructions so maturing FDs are automatically reinvested.
• Review and adjust your ladder annually based on changing interest rates and personal needs.

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With dozens of banks and NBFCs offering fixed deposits in India, choosing the best FD interest rate can feel overwhelming. A difference of even 0.5% in interest rate can mean thousands of rupees in extra earnings over the life of your deposit. This guide helps you navigate the FD landscape in 2025 and make the smartest choice for your money.

Understanding FD Interest Rates

FD interest rates in India are determined by several factors:

• RBI Repo Rate: When the RBI changes the repo rate, banks adjust their FD rates accordingly. A higher repo rate generally means higher FD rates.
• Bank’s Liquidity Needs: Banks that need more deposits to fund lending may offer higher FD rates to attract customers.
• Tenure: Different tenures have different rates. Typically, medium-term FDs (1-3 years) offer the best rates.
• Deposit Amount: Some banks offer higher rates for large deposits (above Rs 2 crore).
• Customer Type: Senior citizens get an additional 0.25-0.75% premium.

Types of Banks and Their Rate Ranges (2025)

Small Finance Banks: 7.5% – 9%

Small finance banks typically offer the highest FD rates in the market. Banks like Unity Small Finance Bank, Ujjivan, AU, and Equitas often lead the rate charts. However, remember that while deposits up to Rs 5 lakh are insured by DICGC, amounts above that carry slightly higher risk compared to large banks.

Private Banks: 6.5% – 7.5%

Large private banks like HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank offer moderate rates with excellent service and online experience. They are a good balance of returns and reliability.

Public Sector Banks: 6% – 7.25%

SBI, Bank of Baroda, PNB, and other PSU banks offer slightly lower rates but come with the comfort of government backing. They are ideal for conservative investors.

NBFCs: 7% – 8.5%

Companies like Bajaj Finance, Shriram Finance, and Mahindra Finance offer competitive FD rates. NBFC FDs are not insured by DICGC, so check the company’s credit rating before investing.

Post Office: 6.9% – 7.5%

Post office time deposits come with sovereign guarantee and competitive rates, especially for the 5-year tenure.

How to Compare FD Rates Effectively

Step 1: Define Your Tenure

First, decide how long you want to lock your money. Then compare rates specifically for that tenure. Do not compare a 1-year rate at one bank with a 5-year rate at another — that is not an apples-to-apples comparison.

Step 2: Check the Effective Annual Yield

The advertised rate may not tell the full story. Ask about the compounding frequency — quarterly compounding gives a slightly higher effective yield than annual compounding. Some banks advertise the effective yield, while others show the nominal rate.

Step 3: Factor in TDS

If your FD interest exceeds Rs 40,000 per year, TDS at 10% will be deducted. Consider post-tax returns when comparing. An FD at 8% with TDS deduction effectively gives you 7.2% if you are in the 10% tax bracket, or 5.6% if you are in the 30% bracket.

Step 4: Check the Credit Rating

For NBFC FDs, always check the credit rating. Look for ratings of AAA or AA+ from agencies like CRISIL, ICRA, or CARE. A higher-rated NBFC offering 7.5% may be better than an unrated one offering 9%.

Step 5: Consider Premature Withdrawal Penalty

A bank offering 7.5% with a 1% premature withdrawal penalty may give you less than a bank offering 7.25% with a 0.5% penalty, if you end up needing the money early.

Special FD Schemes to Watch For

Banks frequently launch limited-period special FD schemes with higher-than-normal rates. These are usually offered for specific tenures (e.g., 444 days, 700 days) and can offer 0.25-0.50% more than regular rates. Keep an eye on bank announcements.

The DICGC Insurance Factor

The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures deposits up to Rs 5 lakh per depositor per bank. This means:

• If you have Rs 10 lakh to invest, consider splitting it across two banks for full insurance coverage.
• NBFC FDs are not covered by DICGC — factor this risk into your decision.
• Post office deposits have sovereign guarantee, which is even stronger than DICGC insurance.

Rate vs Safety: Finding the Balance

The highest rate is not always the best choice. Consider this framework:

• Emergency Fund FDs: Prioritize safety and liquidity. Choose a large bank with low premature withdrawal penalty.
• Growth FDs: For long-term wealth building, a small finance bank or NBFC with a high credit rating and competitive rate works well.
• Income FDs: For regular income needs, choose a reliable bank with non-cumulative FDs and monthly or quarterly interest payouts.

Pro Tips for Maximizing FD Returns

• Use an FD ladder strategy to benefit from rate changes and maintain liquidity.
• Book FDs when rates are at their peak in the interest rate cycle.
• Consider the bank’s reputation and service quality, not just the rate.
• Review and compare rates at least once a year when your FDs come up for renewal.

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Is your bank deducting TDS (Tax Deducted at Source) on your fixed deposit interest even though your total income is below the taxable limit? You can prevent this by submitting Form 15G or Form 15H. These forms declare that your income is below the taxable threshold, and the bank should not deduct TDS. This guide explains who should file, how to submit, and common mistakes to avoid.

What Are Form 15G and Form 15H?

Form 15G is a self-declaration form submitted by individuals below 60 years of age to request the bank not to deduct TDS on interest income, provided their total income is below the basic exemption limit.

Form 15H is the equivalent form for senior citizens (aged 60 and above). The eligibility criteria are slightly more relaxed for senior citizens.

When Is TDS Deducted on FD Interest?

Banks deduct TDS on fixed deposit interest when:

• Total interest income from all FDs in a bank exceeds Rs 40,000 in a financial year (for regular individuals).
• For senior citizens, the threshold is Rs 50,000.
• TDS is deducted at 10% if PAN is provided, or 20% if PAN is not linked.

Who Should Submit Form 15G?

You should submit Form 15G if:

• You are below 60 years of age.
• Your total income (including FD interest) is below the basic exemption limit (Rs 2.5 lakh under old regime or Rs 3 lakh under new regime).
• The tax calculated on your total income is nil.
• You are an individual or HUF (Hindu Undivided Family).

Who Should Submit Form 15H?

You should submit Form 15H if:

• You are 60 years or older (senior citizen).
• The tax on your estimated total income for the year is nil.
• Note: There is no income limit condition for Form 15H — only the tax liability should be nil. Senior citizens can have higher income due to the Rs 50,000 deduction under Section 80TTB and higher exemption limit.

How to Submit Form 15G/15H Online

Step 1: Log In to Your Bank’s Net Banking

Most major banks now allow online submission of Form 15G/15H. Log in to your internet banking portal or mobile app.

Step 2: Navigate to the Form 15G/15H Section

Look for options like “Tax Centre,” “TDS,” “Form 15G/15H,” or “Investment Services” in the menu.

Step 3: Fill in the Form Details

The online form will ask for:

• Your PAN number
• Assessment year
• Estimated total income for the financial year
• Estimated income from fixed deposits at this bank
• Whether you have filed Form 15G/15H earlier, and if so, the number of forms filed

Step 4: Submit and Save Confirmation

Review the details, submit the form, and save the acknowledgement. The bank will process it and stop TDS deduction on your FD interest for that financial year.

How to Submit Form 15G/15H at the Branch

1. Download Form 15G or 15H from your bank’s website or the Income Tax Department’s website.
2. Fill in the form with accurate details. Sign the form.
3. Visit your bank branch and submit the form.
4. Get an acknowledgement receipt from the bank.
5. If you have FDs at multiple branches of the same bank, one submission usually covers all branches.

When to Submit

• Submit at the beginning of each financial year (April). Forms are valid for one financial year only.
• If you open a new FD during the year, submit the form again or ensure the bank has your existing declaration on file.
• If you miss the deadline, TDS will be deducted, and you will need to claim a refund when filing your income tax return.

Common Mistakes to Avoid

• Submitting when income exceeds the limit: If your total income is above the exemption limit, do not submit Form 15G/15H. This is a legal declaration, and incorrect submission can lead to penalties.
• Forgetting to submit every year: Form 15G/15H is valid for one financial year only. You must submit a fresh form each year.
• Not submitting to all banks: If you have FDs at multiple banks, submit the form separately at each bank.
• Wrong PAN: Ensure your PAN is correctly mentioned. A wrong PAN can lead to TDS being deducted at 20%.
• Not considering all income sources: Include income from all sources (salary, business, rent, etc.) when estimating total income, not just FD interest.

What If TDS Is Already Deducted?

If TDS has already been deducted and your income is below the taxable limit, you can claim a refund by:

1. Filing your income tax return (ITR).
2. Reporting the TDS deducted (visible in Form 26AS and AIS).
3. The excess TDS will be refunded to your bank account by the Income Tax Department.

Self-Employed? This Matters Even More

Many self-employed individuals have irregular income and may fall below the taxable limit in certain years. Submitting Form 15G/15H ensures you retain your full FD interest without unnecessary TDS deduction, improving your cash flow.

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