The government-backed Senior Citizen Savings Scheme (SCSS) and bank-offered Senior Citizen Fixed Deposits are two popular investment options for senior citizens to plan a steady income and the safety of capital

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 TableBank Name Additional rates offered to Super Senior Citizen* (over and above to senior citizen rates)5-year tenure (%)SMALL FINANCE BANKSAU Small Finance Bank7.75---Equitas Small Finance Bank7.75---ESAF Small Finance Bank6.50---Jana Small Finance Bank8.20---NorthEast Small Finance Bank8.50---Suryoday Small Finance Bank9.10---Ujjivan Small Finance Bank7.70---Unity Small Finance Bank8.65---Utkarsh Small Finance Bank8.25---PRIVATE SECTOR BANKSAxis Bank7.65---Bandhan Bank6.60---City Union Bank6.500.10% on 365 days; 0.05% on 366 days to 3 years tenureCSB Bank6.25---DBS Bank7.00---DCB Bank7.75---Federal Bank7.40---HDFC Bank7.25---ICICI Bank7.40---IDFC FIRST Bank6.50---IndusInd Bank7.60---Jammu & Kashmir Bank7.00---Karur Vysya Bank7.40---Karnataka Bank6.90---Kotak Mahindra Bank6.70---RBL Bank7.600.25% on all tenuresSBM Bank India8.25---South Indian Bank6.50---Tamilnad Mercantile Bank7.00---YES Bank8.25---PUBLIC SECTOR BANKSBank of Baroda7.400.10% on tenures of above 1 year to 5 yearsBank of India6.750.15% on tenures of 180 days to 10 yearsBank of Maharashtra7.00---Canara Bank7.200.10% on tenure of 444 daysCentral Bank of India7.25---Indian Bank6.750.25% on all tenuresIndian Overseas Bank7.000.25% on all tenuresPunjab National Bank6.750.30% for tenures up to 5 yearsPunjab & Sind Bank7.000.15% 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 India7.500.10% on all tenuresUnion Bank of India7.000.25% on all tenuresSource: 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.

#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}

This story originally appeared on: India Times - Author:Faqs of Insurances