Types of fixed deposits
Fixed Deposit for Children (Minor FD)
Open an FD in a child’s name — who can operate it, the RBI rule for minors above 10, clubbing of income with the parent and TDS.
Updated 30 September 2026 · 25 banks trackedHighest FD rate now
7.45%
Bandhan Bank · 2 – <3 yearsWhat you need to know
Parents or legal guardians can open an FD in a minor’s name to save for education or other goals. Under RBI directions issued in April 2025, minors above 10 years may also open and operate term deposits independently, within limits the bank sets. On turning 18 the account must be converted to a regular account with fresh KYC.
Key rules
| Point | Details |
|---|---|
| Who can open | Parent or legal guardian; minor above 10 years on their own (bank limits apply) |
| KYC | Child’s birth certificate/Aadhaar + guardian’s KYC |
| Tax | Child’s interest is clubbed with the parent who earns more; ₹1,500 per child per year is exempt |
| TDS | Deducted on the minor’s PAN or guardian’s details if interest crosses the threshold |
| At 18 | Convert to major account with the child’s own KYC and signature |
FD vs other options for a child’s goals
| Option | Return | Notes |
|---|---|---|
| Bank FD | ≈6% – 7.45% | Flexible; taxable (clubbed) |
| Sukanya Samriddhi (girl child) | 8.2% | Till 21; tax-free |
| PPF (minor) | 7.1% | 15 years; tax-free |
| Children’s mutual funds / index SIP | Market-linked | Best for 10+ year goals |
Frequently asked questions
Is the interest taxed in the child’s name?
No — it is added to the income of the parent with the higher income, after a ₹1,500 exemption per child.
Information is for education and comparison. Rates and rules change — confirm with your bank and a tax adviser before investing. FinancePortal is not a financial or tax adviser.