Fixed deposits (FDs) remain a popular investment choice for people looking to park surplus funds, particularly risk-averse investors who prefer stable and guaranteed returns on their principal amount. As of May 2026, most leading public and private-sector banks offer FD interest rates between 6% and 7.25% annually, while senior citizens typically enjoy an extra 0.5% interest over standard rates.
At the same time, NBFCs and small finance banks are offering comparatively higher returns, with interest rates as high as 8.30% per annum for regular investors and 8.80% for senior citizens. However, these higher returns may involve relatively greater risk than deposits with major public or private banks.
For those exploring alternatives, several government-backed investment schemes currently offer returns that may outperform traditional FDs, along with added benefits such as tax savings and long-term financial security. Here’s a look at some of the top options, including their features and eligibility criteria.
1. Post Office Time Deposits
Post Office Time Deposits (TDs) are government-backed fixed-income investment options that offer assured returns with sovereign security. Investors can deposit money for a chosen tenure and earn fixed interest over the investment period.
The scheme currently offers four tenure options, with interest rates reaching up to 7.5% for the 5-year deposit during the April–June 2026 quarter. The applicable rates are as follows:
- 1 year: 6.9% per annum
- 2 years: 7% per annum
- 3 years: 7.1% per annum
- 5 years: 7.5% per annum
The Interest calculated on Post Office TDs is mainly compounded quarterly and probably paid annually. Accounts can be opened individually, jointly (up to three adults), or by minors aged 10 years and above.
Unlike many banks that provide higher FD rates to senior citizens, Post Office Time Deposits offer the same interest rates to all investors, regardless of age.
The scheme requires a minimum investment of ₹1,000 and does not impose any maximum deposit limit. Moreover, investments in the 5-year Time Deposit qualify for tax benefits under Section 80C of the Income Tax Act, available only under the old tax regime.
2. Post Office Monthly Income Scheme (POMIS)
The Post Office Monthly Income Scheme (POMIS) is a government-supported savings option that currently offers an interest rate of 7.4% per annum for the April–June 2026 quarter, making it a more attractive choice than many traditional fixed deposits for regular investors.
This scheme has a fixed maturity period of five years and allows individuals to begin investing with as little as ₹1,000. The maximum investment limit is capped at ₹9 lakh for individual accounts and ₹15 lakh for joint accounts. Any eligible individual can open an account and invest in the scheme.
However, POMIS does not provide tax benefits under Section 80C of the Income Tax Act, and the interest income earned is fully taxable. Investors can also opt for a premature withdrawal after one year, though certain penalties may apply.
3. Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is a widely preferred fixed-income investment option among retirees, mainly because of its government guarantee, regular quarterly income, and relatively higher interest rates compared to most fixed deposits.
- Interest Rate: SCSS currently offers an attractive 8.2% annual interest rate for senior investors.
- Tenure: The scheme has an initial maturity period of 5 years, which can be extended in blocks of 3 years after maturity.
- Minimum & Maximum Investment: Investors can start with a minimum deposit of ₹1,000, in multiples of ₹1,000, with a maximum investment limit of ₹30 lakh per individual across all SCSS accounts.
- Account Type: SCSS accounts can be opened individually or jointly with a spouse.
- Eligibility:
- Individuals aged 60 years and above can invest.
- Those aged 55–60 years are eligible if they have retired under a superannuation or voluntary retirement scheme and open the account within one month of receiving retirement benefits.
- Retired defence personnel can invest from the age of 50 years.
- Tax Benefits: Investors can claim a tax deduction of up to ₹1.5 lakh per financial year under Section 80C of the Income Tax Act.
- Taxation Rules: Interest earned under SCSS is fully taxable as per the investor’s income tax slab, and TDS may apply if annual interest income exceeds ₹1 lakh.
4. National Savings Certificate (NSC)
The National Savings Certificate (NSC) is a reliable government-backed fixed-income investment option that offers secure returns. For investments made during the April–June 2026 quarter, the scheme provides an annual interest rate of 7.7%, making it a competitive alternative to traditional fixed deposits.
Key Features of NSC
- Interest Rate: NSC currently offers an annual interest rate of 7.7% for the April–June 2026 quarter.
- Minimum Investment: Investors can start with a minimum deposit of ₹1,000.
- Additional Contributions: Further investments can be made in multiples of ₹100.
- Maximum Investment Limit: There is no upper investment cap, allowing individuals to invest any amount.
- Eligibility: Any individual is eligible to invest in the scheme.
- Tax Benefits: Investments qualify for a tax deduction of up to ₹1.5 lakh per financial year under Section 80C of the Income Tax Act, available only under the old tax regime.
- Tenure: NSC comes with a fixed maturity period of 5 years.
- Interest Payout: Interest is credited annually and automatically reinvested until the end of the fourth year, helping the investment grow cumulatively.
- Maturity Benefit: The total accumulated amount, including reinvested interest, is paid to the investor upon maturity.
5. Sukanya Samriddhi Yojana (SSY)
This Scheme is a government-backed savings scheme designed exclusively for girl children. Parents or guardians can open an account for a girl child below 10 years of age. The account can be opened at a post office or an authorised bank branch.
Key Features of SSY
- Exclusive for Girl Child: The scheme is available only for girl children below 10 years of age. The account can be opened by a parent or legal guardian.
- Interest Rate: SSY currently offers an annual interest rate of 8.2%. This is higher than the returns offered by many fixed deposits from leading banks.
- Higher Return Potential: The scheme may offer better returns than fixed-income products from major lenders. These include State Bank of India, HDFC Bank, ICICI Bank, Bank of Baroda, and Punjab National Bank
- Maturity Period: The account matures 21 years from the date of opening. However, premature closure is permitted if the girl child gets married after attaining 18 years of age.
- Investment Limits: The scheme requires a minimum deposit of ₹250. The maximum contribution allowed is ₹1.5 lakh per financial year.
- Triple Tax Benefits: SSY falls under the Exempt-Exempt-Exempt (EEE) category. This means the investment amount, interest earned, and maturity proceeds are completely tax-free.
FAQs
Q1. Which government-backed scheme currently offers the highest return?
Ans: In India, the highest returns among government-backed savings schemes are currently offered by the Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Yojana (SSY). Both schemes currently offer an interest rate of 8.2% per annum. Both schemes currently offer an interest rate of 8.2% per annum. This makes them some of the most rewarding fixed-income investment options.
Q2. Which bank offers up to 9.5% interest on fixed deposits in India?
Ans: In India, some small finance banks offer FD interest rates of up to 9.5% per annum on select tenures.
These include Unity Small Finance Bank and, at times, North East Small Finance Bank. However, these rates may vary depending on the deposit period and customer category, such as senior citizens.
Q3. Which investment option is considered completely safe?
Ans: Fixed Deposits (FDs) are widely regarded as one of the safest and most dependable investment choices in India. They are considered low-risk and generally offer stable returns of around 6% to 7%, depending on the bank and investment tenure.
Q4: What is the 444-day senior citizen scheme?
Ans: The 444-day senior citizen scheme is a special fixed deposit (FD) offered by several banks in India, providing higher interest rates for senior citizens (60 years and above), usually ranging between 6.95% and 8.10% per annum.
