DCB, Union Bank and Indian Bank Just Repriced FDs — Whose Rate Actually Wins After Tax?
Personal finance · Fixed deposits · India, August 2026
DCB, Union Bank and Indian Bank Just Repriced FDs — Whose Rate Actually Wins After Tax?
You saw a headline this week promising 8.05 per cent. You opened your banking app, went to the deposit screen, and the number staring back was closer to 6.5. Nobody lied to you. The 8.05 belongs to a depositor aged 70 or above, at one bank, on a tenure measured in months rather than years, and it becomes something else once income tax has taken its cut. Here is what actually changed in the first week of August 2026, and which of these repriced cards is genuinely better for your money.
Quick Summary
Five banks repriced deposits in the week to 8 August 2026 after the RBI held the repo rate at 5.25 per cent for a fourth straight meeting. Among the banks that moved, DCB Bank now carries the highest general rate at 7.50 per cent, on three narrow windows only. Union Bank of India tops out at 6.55 per cent and Indian Bank at 6.65 per cent, both on a 555-day deposit. Axis Bank did not move at all. The bigger decision is not which bank, but how much you place in any single one: deposit insurance stops at ₹5 lakh per depositor per bank, principal and interest together.
What actually moved in the week to 8 August
The Monetary Policy Committee met from 3 to 5 August 2026 and voted unanimously to leave the repo rate at 5.25 per cent, retaining a neutral stance. That is the fourth consecutive hold; the last move was a cut from 5.50 to 5.25 per cent in December 2025. The RBI lifted its FY27 growth forecast to 6.7 per cent and trimmed its inflation projection to 5 per cent.
Banks do not need a policy move to reprice, and five did not wait for one. Union Bank of India, Indian Bank and DCB Bank put revised cards into effect on 4 August, CSB Bank on 5 August and Jana Small Finance Bank on 6 August. The direction was not uniform. DCB raised its top rate by as much as 15 basis points. Union Bank’s best senior citizen rate went the other way, slipping 5 basis points to 7.05 per cent. Union Bank also revised its savings account rates from 10 August.
Why the advertised rate is almost never your rate
Indian rate cards are banded three ways at once, and each band quietly moves you off the headline. The first is tenure. Peak rates sit in deliberately awkward windows: DCB pays 7.50 per cent for 24 months to less than 25 months, and 7.10 per cent if you book 15 months instead. Union Bank and Indian Bank both put their best money on 555 days, which is not a number anyone picks by instinct.
The second band is amount: almost every published retail rate applies to deposits below ₹3 crore, and larger tickets are priced separately. The third is category. Senior citizens usually collect an extra 25 to 50 basis points, and some banks add a further slice above 70 or 80 years of age. Union Bank adds a flat 50 basis points for seniors and another 25 for super seniors. Indian Bank’s IND GROW pays the public 6.65 per cent, seniors 7.15 and super seniors 7.40 on the same 555 days.
Then there is the quiet gain nobody advertises. Cumulative deposits compound quarterly, so the yield you actually earn sits above the quoted rate: 7.50 per cent becomes an effective 7.71 per cent a year. It is the one place the fine print is generous.
The five cards, side by side
Here is the comparison that matters, with the tenure band attached to every rate, because a rate without its band is not information. Axis is the benchmark that did not move: its card has been unchanged since 1 May 2026, worth knowing if your renewal is sitting there on autopilot.
| Bank | Peak general rate | Exact tenure band | Senior / 70 plus | Effective yield | ₹5 lakh becomes |
|---|---|---|---|---|---|
| DCB Bank | 7.50% | 24 to under 25 months, 34 to under 35 months, 60 to 61 months | 8.00% / 8.05% | 7.71% | ₹5,80,111 in 2 years |
| CSB Bank | 7.10% | 18 months exactly | 7.35% / not stated | 7.29% | ₹5,55,670 in 18 months |
| Indian Bank | 6.65% | 555 days, IND GROW | 7.15% / 7.40% | 6.82% | ₹5,52,741 in 555 days |
| Union Bank | 6.55% | 555 days | 7.05% / 7.30% | 6.71% | ₹5,51,915 in 555 days |
| Axis Bank | 6.45% | 15 months and above | 6.95% to 7.20% | 6.61% | ₹5,51,090 in 555 days |
Worked example: where the ₹5,80,111 comes from
Take DCB’s 7.50 per cent on a 24-month cumulative deposit of ₹5,00,000. Interest is credited quarterly, so the balance grows 1.875 per cent every quarter for eight quarters. That compounding lifts the effective annual yield to 7.714 per cent, and the deposit matures at ₹5,80,111, of which ₹80,111 is interest. Book the same money at Union Bank’s 6.55 per cent for the same two years and you finish at ₹5,69,379. The gap is ₹10,731, or ₹21,463 on a ₹10 lakh corpus.
What ₹5 lakh actually earns across the five
Percentages compress differences until they look trivial. Rupees do not. Held for a common two years, the spread between the best and worst of these five cards is worth roughly a month of a modest household’s groceries every year, for nothing more than reading a tenure band correctly.
The number the rate tables never print
Fixed deposit interest is taxed at your slab rate as income from other sources. There is no concessional treatment and no indexation, and this single fact reorders every comparison you have just read. It also accrues annually, so a two-year cumulative deposit is taxable in both years even though it pays you nothing until it matures. Savers who declare the whole amount at maturity get mismatch notices, because the bank has already reported it.
Tax deducted at source is not the tax. It is an advance credit of 10 per cent, applied once interest at one bank crosses ₹50,000 in a financial year, or ₹1,00,000 for a senior citizen. If your slab is 30 per cent, the other 20 points are still payable at filing. And once the threshold is crossed, TDS applies to the whole interest amount, not just the excess.
Run DCB’s headline 7.50 per cent through the slabs and the product changes character completely. At 30 per cent, a 7.71 per cent effective yield becomes 5.40 per cent post-tax, which against the RBI’s own 5 per cent inflation projection for FY27 leaves a real return of about 0.4 per cent. The deposit preserves your purchasing power. It does not grow it.
How much belongs in any one bank
Deposit insurance from the DICGC covers ₹5,00,000 per depositor per bank. That figure covers principal and interest together, across every branch and every account type held in the same right and capacity, and it should shape your deposit sizing more than any rate on this page.
Here is the trap. If you place exactly ₹5,00,000 in one bank, you are at the ceiling on day one, and every rupee of interest that accrues afterwards sits outside cover. Jana Small Finance Bank now offers senior citizens 8.30 per cent for above two years to three years, the highest rate any bank moved to this week. A ₹5 lakh deposit at that rate matures at ₹6,39,739, which means ₹1,39,739 of your own money is uninsured by the end. To stay fully covered for the whole term you would need to start at about ₹3,90,785.
Safe at any tenure
Safe to 3 years
Safe to 2 years
Interest exposed
Split it
The concentration mistake
Chasing the best rate usually means concentrating money, which is exactly the wrong instinct above ₹5 lakh. A saver holding ₹8,00,000 at DCB, ₹6,00,000 at Jana SFB and ₹3,00,000 at Union Bank has ₹17,00,000 on deposit and only ₹13,00,000 insured. Four lakh sits outside cover, in pursuit of perhaps a percentage point. Small finance banks are RBI-regulated and DICGC-covered like any other bank, so this is not a warning about them specifically. It is a warning about size.
The 555-day habit, and the five-year trap
Notice how many banks landed on 555 days. It is long enough to fund the bank at a useful duration and short enough that savers accept it, and both Union Bank and Indian Bank put their best public rate there. Indian Bank’s 6.65 per cent beats Union Bank’s 6.55 on identical terms, worth ₹826 on ₹5 lakh. Real, but small enough that a branch you can walk into may matter more.
The costlier decision is booking long money you might need back. Breaking early does not simply forfeit future interest. The bank re-prices the entire deposit to the card rate for the period you actually held it, then deducts a penalty of typically 0.5 to 1 percentage point. A ₹5,00,000 deposit booked at 7.50 per cent for five years and broken after one year gets paid at roughly 5.90 per cent, not 7.50. You receive ₹5,30,159 instead of the ₹5,38,568 you had mentally banked, so the exit costs ₹8,409.
The move almost nobody makes
If the need is short-term, take a loan or overdraft against the deposit instead of breaking it. These are priced a little above your FD rate, commonly 0.75 to 2 percentage points over, and you pay interest only on what you draw. For a three-month cash gap, that is almost always cheaper than surrendering the re-priced interest on a five-year deposit, and your original rate survives intact.
A ladder built from this week’s actual cards
If you cannot forecast rates, and nobody can, a ladder removes the need to. Split the corpus across tenures so one rung matures every year. Below is a ₹10 lakh ladder built only from bands that exist on the cards published this month.
Now look at what that ladder did to your insurance. Three rungs sit at DCB, which is ₹6,00,000 of principal in one bank before any interest accrues. The fix is to move one rung to CSB’s 18-month window or to a large bank you already use, accepting a slightly lower rate to bring the corpus back inside cover. That trade is almost always worth making, and it is the step savers skip. A ladder buys liquidity and reinvestment smoothing, not extra return.
Decoder: what the rate card is actually telling you
Every term below appears on a card published this month, and each changes what you receive.
| What you see | What it means | What to do |
|---|---|---|
| 555 days | A special tenure of 18.2 months carrying the peak public rate at Union Bank and Indian Bank | Book exactly 555 days, not 18 months, or you drop to 6.15 per cent at Union Bank |
| 24 months to less than 25 months | DCB’s peak window; 25 months onward pays materially less | Set maturity inside the window and diarise the date |
| Senior Citizen Plus, 70 plus | DCB’s third tier, worth 5 basis points over the standard senior rate | Carry age proof; the tier is not applied automatically at every branch |
| Below ₹3 crore | The retail band; bulk deposits are priced separately and sometimes lower | Ask for the bulk card if your deposit is larger |
| IND GROW, IND Prosper, IND Supreme 2.0 | Named special deposits at 555, 777 and 300 days, withdrawable at short notice | Check the scheme is still open on the day you book |
| Cumulative or payout | Cumulative compounds quarterly to a higher effective yield; payout pays the quoted rate | Choose payout only if you need the income now |
| Callable or non-callable | Non-callable pays slightly more but bars premature withdrawal entirely | Avoid non-callable unless the money is genuinely idle |
| Form 121 | The unified no-TDS declaration that replaced Forms 15G and 15H under the Income-tax Act, 2025 | File it at the start of the financial year, separately at each bank, only if your income is genuinely below the taxable limit |
| Effective from 4 August 2026 | The card can change again without notice; your booked rate cannot | Confirm the rate on the day of booking, not the day of reading |
Where a government scheme still beats all five
If you are 60 or above, do the SCSS comparison before you touch any of these cards. The Senior Citizens’ Savings Scheme pays 8.20 per cent for the July to September 2026 quarter, unchanged for a ninth consecutive quarter, with a ceiling of ₹30 lakh per individual and sovereign backing rather than a ₹5 lakh insurance cap. On ₹5,00,000 that is ₹41,000 a year paid quarterly, against ₹40,000 from DCB’s 8.00 per cent senior rate and ₹36,000 from Axis at 7.20 per cent.
The rest of the small savings table is worth a glance: NSC at 7.70 per cent, KVP at 7.50 per cent maturing in 115 months, POMIS at 7.40 per cent and PPF at 7.10 per cent. Every one of these except PPF is fully taxable, so run them through your slab first. None offers the thing FDs are good at, which is choosing your own maturity date and getting your capital back on it.
One rule change to note this year
Under the Income-tax Act, 2025, effective 1 April 2026, Forms 15G and 15H have been replaced by a single declaration, Form 121, with the TDS provision moving into the consolidated Section 393 framework. Rates and thresholds are unchanged at 10 per cent above ₹50,000 of interest per bank, and ₹1,00,000 for senior citizens. Bank staff and older articles will still say 15G and 15H for a while. Ask for the current form by both names.
What to do this week
- Find your maturity dates first. An FD that matures without instructions may auto-renew at whatever rate prevails, or sit earning almost nothing. This is the most common way savers lose a percentage point.
- Match the tenure band exactly. Do not book 18 months at Union Bank when 555 days pays 40 basis points more, and do not book 25 months at DCB when 24 pays 7.50 per cent.
- Size each deposit against the ₹5 lakh cover. Work backwards from maturity value, not from the amount you are placing today.
- Do the post-tax sum before choosing. If you are in the 30 per cent slab, compare against instruments taxed differently rather than against another bank’s headline.
- If you are 60 or above, price SCSS first. At 8.20 per cent with sovereign backing it beats every senior citizen rate published this week except Jana SFB’s 8.30 per cent, which carries the insurance ceiling.
- Register a nominee on every deposit. A nominee receives the funds; that is not the same as being the legal heir, but it is the difference between a claim and a court process.
Frequently asked questions
Which bank gives the best FD rate after this week’s changes?
Among the banks that repriced, DCB Bank leads for general customers at 7.50 per cent, on 24 to under 25 months, 34 to under 35 months and 60 to 61 months. CSB follows at 7.10 per cent for exactly 18 months, then Indian Bank at 6.65 and Union Bank at 6.55, both on 555 days.
Did Axis Bank change its FD rates in August 2026?
No. Axis was not among the five banks that repriced in the week to 8 August 2026. Its published card has been unchanged since 1 May 2026, with general rates running from 3.00 to 6.45 per cent and senior citizen rates up to about 7.20 per cent for five to ten years. Confirm the current card with the bank before booking.
What is the highest senior citizen FD rate right now?
Jana Small Finance Bank moved to 8.30 per cent for above two years to three years on 6 August 2026. DCB pays seniors 8.00 per cent and 8.05 per cent above age 70, CSB up to 7.35 per cent, Indian Bank 7.15 and Union Bank 7.05. The Senior Citizens’ Savings Scheme pays 8.20 per cent with sovereign backing.
How much of my fixed deposit is actually insured?
The DICGC insures ₹5,00,000 per depositor per bank, covering principal and interest together, across all branches and account types held in the same right and capacity. Splitting across branches of the same bank does nothing; splitting across different banks, or different holding capacities, extends cover. Confirm the treatment of joint holdings with your bank.
Why is 555 days better than booking 18 months?
Because banks price special tenures, not round ones. Union Bank pays 6.55 per cent at exactly 555 days and 6.15 per cent for 445 to 554 days, so a saver booking a neat 18 months lands in the lower band. Match the exact number of days rather than approximating.
Is TDS the full tax on my FD interest?
No. TDS is an advance credit of 10 per cent, deducted once interest at one bank crosses ₹50,000 in a financial year, or ₹1,00,000 for senior citizens. The interest is taxable at your full slab rate, so a 30 per cent taxpayer still owes the remaining 20 points at filing. Interest also accrues annually on cumulative deposits, so declare it every year.
What happens if I break my FD early?
The bank re-prices the whole deposit to the card rate for the period you actually held it, then subtracts a penalty of typically 0.5 to 1 percentage point. On ₹5,00,000 booked at 7.50 per cent for five years and broken after a year, that works out to roughly ₹8,409 less than you expected. Consider an overdraft against the deposit instead.
Should I lock in a five-year FD now that the repo rate is on hold?
Nobody can tell you where rates go next, and any article that does is guessing. The mechanical trade-off is this: a long tenure fixes today’s rate for longer but gives up any later rise, while short tenures keep flexibility and expose you to reinvesting lower. Laddering exists precisely because it does not require a forecast.
Are small finance bank FDs safe at 8.30 per cent?
They are RBI-regulated and DICGC-covered on the same terms as any other bank, so the regulatory answer is yes. The practical answer is that the cover is the limit: an extra percentage point on a balance above ₹5 lakh, interest included, is uninsured. Keep the maturity value inside the ceiling and the risk question largely disappears.
The short version
Five banks repriced deposits in the week to 8 August 2026, with the RBI holding the repo rate at 5.25 per cent. DCB Bank offers the best general rate among them at 7.50 per cent, but only on three narrow windows, and 8.00 or 8.05 per cent for seniors. Union Bank and Indian Bank both price their best public rate on 555 days, at 6.55 and 6.65 per cent. Axis did not move. The rate matters less than three things you control: matching the exact tenure band, keeping each bank’s maturity value inside the ₹5 lakh ceiling, and knowing what your slab leaves you with.
