Want better returns than FDs? Here are top five government-backed schemes you can consider
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- Bank Fixed Deposits offer rates between 6% and 7.25% per annum in May 2026, with senior citizens receiving an extra 0.5% premium.
- NBFCs offer up to 8.30% for general depositors, while small finance banks can go as high as 8.80% for seniors, but both carry higher risk than traditional banks.
- Post Office Time Deposits guarantee sovereign‑backed returns, offering up to 7.5% for a 5‑year tenure, with quarterly compounding, a ₹1,000 minimum deposit, and eligibility for tax deduction under Section 80C (old regime).
- Post Office Monthly Income Scheme yields a 7.4% annual interest rate for a 5‑year term, allows a ₹1,000 minimum and ₹9 lakh (single) / ₹15 lakh (joint) maximum investment, but interest is fully taxable and no Section 80C benefit.
- Senior Citizens Savings Scheme currently pays 8.2% per annum, with a 5‑year initial maturity and extensions in three‑year blocks, requiring a ₹1,000 minimum deposit in multiples of ₹1,000.
Why it matters: Retail investors, especially seniors, gain access to 7‑8% safe returns, while banks face competition from higher‑yielding, sovereign‑backed schemes that provide a competitive alternative to traditional FD rates.
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