LIC FD Interest Rates – Latest Rates & Guide

Key Takeaways
 

• LIC FD Interest Rates for 2025 are up to 7.75% for the general public and 8.00% for senior citizens on 3 to 5-year terms.
   
• Senior citizens benefit more from LIC FDs due to additional 0.25% interest.
   
• Premature withdrawal reduces returns, especially if closed before completing 6 months.
   
• TDS is applicable on interest income above ₹40,000 (₹50,000 for senior citizens), and net returns must be calculated post-tax.
   
• LIC FDs are safe, AAA-rated, and offer better rates than many banks, especially in the 2–5 year tenure range.

Bonus: If you're unsure about the right tenure, start with a ladder strategy, split your investment into multiple LIC FDs with different maturity dates to balance liquidity and returns.

LIC Bank FD interest rates are fixed returns paid by LIC’s deposit schemes for certain tenures, guaranteed and stable for investors.

Ramesh Sharma, a 42-year-old shopkeeper in Nashik, invested ₹5,00,000 in a 3-year LIC FD at 7.75%. Over time, his investment grew to ₹6,38,750, earning him a total interest of ₹1,38,750. His cousin Neha, aged 62, invested ₹3,00,000 under the senior citizen rate of 8% for the same term. 

She received ₹3,77,000 at maturity, earning ₹77,000 in interest. Both chose the cumulative option, where interest is added yearly. These real-life examples help explain how LIC FD Interest Rates work in practical savings situations.

This blog includes the current LIC FD Interest Rates for 2025, different scheme types, features and benefits, and a comparison with other banks.

LIC Bank FD Interest Rates Overview

LIC Housing Finance offers fixed deposits that are known for stable returns and guaranteed interest rates. These are designed for individuals looking for a secure investment.
 

• LIC FD Interest Rates apply to fixed deposit schemes offered by LIC Housing Finance.
   
• The rates are fixed at the time of deposit and remain unchanged during the lock-in period.
   
• Investors can choose between cumulative (interest paid at maturity) or non-cumulative (monthly/quarterly/annual payouts).
   
• These deposits are rated AAA (Stable), indicating high safety and low default risk.
   
• They are often used by conservative investors who prefer security over higher but uncertain returns.

These basic details set the foundation for understanding how LIC FDs can help you build a safe savings plan.

LIC Bank FD Interest Rates 2025

Knowing the exact LIC FD Interest Rates for 2025 helps you compare them with other savings options and plan your investments better. Here is a table showing the latest interest rates for deposits below ₹2 crore:
 

These rates are among the best available for non-bank FDs. Senior citizens enjoy an extra 0.25% on all tenures.

LIC FD Interest Rates are attractive for both short-term and long-term investors looking for guaranteed earnings.

Types of LIC Bank Fixed Deposit Schemes

LIC offers multiple FD types so that investors can choose based on interest payout preferences and financial goals.

• Cumulative FDs: These pay interest at the end of the term. It’s added annually and gives more return due to compounding.
   
• Non-Cumulative FDs: These pay interest monthly, quarterly, or annually, and are good for those needing regular income.
   
• Sanchay Deposit Scheme: This is LIC's public deposit scheme for individuals, HUFs, and companies.
   
• Bulk FDs: For deposits above ₹2 crore, offered at negotiable rates.
   
• Promotional FDs: Limited-time offers with slightly higher LIC FD Interest Rates.

This flexibility helps investors pick the best FD scheme for their saving or income needs.

Features and Benefits of LIC Bank FD

LIC FD schemes are built with safety and reliability in mind, making them popular among cautious investors.
 

These features show how LIC FD Interest Rates work in favour of long-term and short-term financial goals.

Comparison of LIC FD Rates with Other Banks

Comparing LIC FD Interest Rates with bank rates helps understand how well LIC performs in the current financial market.
 

LIC FD Interest Rates are currently higher than those offered by most traditional banks, especially in the 2–5 year range.

For conservative investors seeking higher returns than public sector banks, LIC FDs may be a smart option.

Eligibility Criteria & Required Documents for LIC Bank FD Interest Rates

It’s important to check whether you qualify to invest in an LIC FD and what documents are needed.

Eligibility Criteria:

Here are the eligibility criteria:

• Indian residents (aged 18+)
   
• Hindu Undivided Families (HUFs)
   
• Senior citizens (aged 60 or more)
   
• Companies and trusts (as per scheme terms)
   
• NRIs (only under NRO deposits in select cases)

Make sure you are eligible for LIC FD before investing your time and money.

Required Documents:

Get all your documents handy for fast process: 
 

Submitting the correct documents ensures smooth processing of the FD account without delays.

Tax Implications on LIC Bank FD

Understanding the tax on interest earned from LIC FDs helps you calculate your post-tax returns better.

• LIC deducts 10% TDS if total interest earned exceeds ₹40,000 in a year (₹50,000 for senior citizens).
   
• If PAN is not provided, TDS will be charged at 20%.
   
• Interest earned must be declared in your income tax return and taxed as per your income slab.
   
• If your total income is below the taxable limit, you can submit Form 15G or 15H to avoid TDS.
   
• LIC FD Interest Rates are not tax-free; they are fully taxable as “Income from Other Sources”.

For example, if Rahul earns ₹60,000 interest in a year and doesn't submit Form 15G, ₹6,000 will be deducted as TDS.

LIC Bank FD Premature Withdrawal & Closure Rules

While LIC FDs are meant for long-term savings, there may be cases where you need to withdraw early.

• Premature withdrawal is allowed after 3 months from the date of deposit.
   
• If withdrawn before 6 months, no interest is paid.
   
• If withdrawn after 6 months but before maturity, 1% is deducted from the applicable interest rate.
   
• No penalty is charged on maturity or closure after full term.
   
• Partial withdrawal is not allowed; only full closure is permitted.

For example, Meena deposited ₹3,00,000 for 3 years at 7.75%. She withdrew it after 1 year. She received interest at 6.75% instead of 7.75%, due to a 1% penalty. Understanding these rules helps you plan your liquidity without losing much of your earnings.

How to Invest in LIC Bank FD?

Investing in LIC FD is simple and can be done both online and offline. You just need to follow a few basic steps.

• Visit the nearest LIC Housing Finance branch or an authorised collection centre.
   
• Collect and fill the fixed deposit application form.
   
• Choose between cumulative or non-cumulative FD based on your interest payout preference.
   
• Submit KYC documents including PAN, Aadhaar, and address proof.
   
• Pay the deposit amount via cheque, NEFT/RTGS, or demand draft.
   
• Collect your fixed deposit receipt or certificate for your records.

Investing in LIC FD is a safe option for those who want stable returns with minimal paperwork.

Conclusion

LIC FD Interest Rates offer a combination of security, steady income, and relatively high returns. Whether you’re a young professional saving for a future goal or a senior citizen planning monthly expenses, LIC’s fixed deposits provide a reliable way to earn. 

With flexible terms, easy process, and competitive interest, LIC FD is a preferred option for Indian investors who want to grow their money safely.

To make the most of these schemes, compare rates, plan tenure wisely, and always check for updated offers or limited-time promotions by LIC Housing Finance.

FAQs

Can I invest in LIC FD online through net banking?
Currently, LIC FDs must be opened via physical forms through LIC Housing Finance branches or authorised centres.

What happens if I forget to renew my LIC FD on time?
LIC generally auto-renews the FD for the same tenure at prevailing interest rates unless you instruct otherwise.

Does the LIC FD interest rate differ for online and offline bookings?
No, LIC FD interest rates remain the same whether you invest online or offline.

Can I take a loan against my LIC FD without breaking it?
Yes, LIC FD allows loans up to 90% of the deposit amount without needing to break the FD.

Is the LIC FD available for NRIs under the same terms?
No, LIC FDs are not available for NRIs; they are only offered to resident Indian individuals and HUFs.

How is TDS applied on interest earned from LIC FD?
TDS is deducted if the annual interest on LIC FD exceeds ₹40,000 (₹50,000 for senior citizens), as per Income Tax rules.

Does LIC FD offer auto-renewal or partial withdrawal options?
LIC FD allows auto-renewal on maturity but does not permit partial withdrawal before the lock-in period ends.

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About the Author

LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.