In the current geopolitical scenario, where global equity markets are enduring difficult times due to the ongoing dispute between the US and Iran, fixed deposits (FDs) remain one of the most preferred investment options for individuals in the nation seeking easy, predictable returns.
This also calls for a proper analysis of how these fixed deposits can help investors in generating solid annual income. So that decision makers can make the best investment decisions, taking into account the impact of inflation.
Keeping this in mind, let us see whether a ₹15 lakh fixed deposit can generate ₹1 lakh in annual income. What will be the minimum interest rate required on such an FD to accomplish this objective? Can this target be accomplished at all? How much more return can an ₹15 lakh FD generate for a common citizen?
Let us discuss these aspects in detail, starting from the current interest rates on fixed deposits offered by prominent public sector banks.
Source: Data as on respective banks' websites as of June 26, 2026, for deposits below ₹3 crore. Compiled by BankBazaar.com.
The above-discussed fixed deposit rates for common citizens provide a useful benchmark for analysing and estimating the income a fixed deposit can eventually generate.
As most of the above-discussed financial institutions offer FD rates between 6% and 6.8%, the annual interest on a ₹15 lakh FD investment will primarily depend on the bank and tenure one selects. The table below explains how much annual and monthly income a ₹15 lakh FD can generate at different interest rates.
Formula for interest rate calculation
Now, to earn exactly ₹1 lakh annually, the required interest rate is calculated as follows:
Required Interest Rate = ( ₹1,00,000 ÷ ₹15,00,000) × 100 = 6.67% per annum
In summary, a ₹15 lakh fixed deposit (FD) can help an investor generate approximately ₹1 lakh in annual income, but only if the FD earns an interest rate of around 6.67% or more, before taxes.
As the current public sector bank FD rates indicate, only a few financial institutions and tenures can currently offer rates close to or exceeding this threshold.
This makes comparison of interest rates, factoring in taxation (fds are taxed as per the applicable income tax slabs), proper due diligence, and consultation with a certified financial advisor a must for all aspiring investors before making any investment decision. Looking at both pre-tax and post-tax returns can help determine whether a fixed deposit is the right choice for meeting annual income goals.
