Sundaram Finance hikes interest rates on fixed deposits; offers up to 8% returns — check details and effective date
Non-banking financial company Sundaram Finance Limited on Thursday announced an increase in interest rates across various fixed deposit tenures, with the revised rates coming into effect from Friday, October 16, 2026.
The company has raised interest rates on one-year deposits by 30 basis points and those on two- and three-year deposits by 25 basis points. The hike will apply to both regular depositors and senior citizens.
For regular depositors, the interest rate on one-year deposits has been raised from 6.70% per annum to 7% per annum, while two- and three-year deposit rates witnessed a hike of 25 basis points each.
Senior citizens will continue to earn higher rates than regular depositors, with the interest rate on three-year deposits now reaching 8% per annum.
| Deposit tenure | Previous rate (regular) | Revised rate (regular) | Previous rate (senior citizens) | Revised rate (senior citizens) |
|---|---|---|---|---|
| 1 year | 6.70% | 7.00% | 7.20% | 7.50% |
| 2 years | 7.00% | 7.25% | 7.50% | 7.75% |
| 3 years | 7.25% | 7.50% | 7.75% | 8.00% |
Source: Sundaram Finance Ltd.
Sundaram Finance has a deposit base of ₹6,088 crore and holds AAA ratings with a stable outlook from credit rating agencies including ICRA and CRISIL, indicating the highest degree of safety for its deposits.
Sundaram Finance's decision to raise interest rates on its fixed deposits comes after the Reserve Bank of India (RBI) on 7 October raised repo rate by 25 bps to 5.50% from 5.25%, marking the first such increase since February 2023.
A repo rate hike increases the cost at which banks borrow money from the central bank and thus can influence lending and deposit rates across the financial system. Banks and NBFCs may respond by revising their rates to manage funding costs, attract deposits and remain competitive in the market.
However, the impact of a repo rate change on deposit rates is not always immediate or the same across different companies or banks. The timing and extent of any revision depend on factors such as an institution's liquidity position, funding requirements and competitive strategy.
Sundaram Finance's latest revision gives depositors an opportunity to earn higher returns on select tenures, with senior citizens eligible for interest rates of up to 8% per annum on three-year deposits.
Interest earned on bank fixed deposits is taxable under “Income from Other Sources” and added to the depositor’s taxable income. The applicable income tax slab determines the final tax liability.
Banks may deduct tax at source (TDS) when interest exceeds the applicable threshold. For bank deposits, the threshold is ₹50,000 in a financial year for non-senior citizens and ₹1 lakh for senior citizens. TDS is generally deducted at 10% when the depositor’s PAN is furnished.
However, TDS is not the final tax liability. Depositors may have to pay additional tax or may be eligible for a refund when filing their income tax return (ITR), depending on their actual tax liability.
Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience. <br><br> While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments. <br><br> She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies. <br><br> Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging. <br><br> Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding. Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.
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