Quick Answer: A fixed deposit (FD) in Sri Lanka is a savings account where you deposit money for a fixed period at a guaranteed interest rate. The best FD rate in Sri Lanka as of 2026 is 9.5% per annum from Commercial Bank. FDs are offered by all major licensed banks and are considered one of the safest investments available.
What is a Fixed Deposit?
A fixed deposit (FD) - also called a term deposit or time deposit - is a financial product offered by banks and finance companies where you deposit a sum of money for a predetermined period (the tenure) at a fixed interest rate. Unlike a regular savings account, the interest rate is locked at the time of deposit and does not change, regardless of market fluctuations.
At the end of the tenure (maturity), you receive your original deposit (principal) plus the accumulated interest. FDs are one of the most popular savings instruments in Sri Lanka because they offer guaranteed, predictable returns with virtually no market risk.
How Does an FD Work in Sri Lanka?
Here is a step-by-step overview of how a typical FD works in Sri Lanka:
- Choose a bank and tenure: Decide which bank you want to place the deposit with and for how long - options typically range from 1 month to 5 years.
- Deposit the funds: Visit the bank branch (or use online banking for some banks) and deposit your chosen amount. Most banks have a minimum deposit requirement.
- Receive a fixed interest rate: The bank offers you a rate locked for the entire tenure. This rate will not change even if the bank later changes its published rates.
- Interest accrues: Interest accumulates daily or monthly depending on the bank's terms.
- Choose your payout: Decide whether you want interest paid monthly, quarterly, or at maturity.
- Maturity: At the end of the tenure, your principal and interest are returned. You can withdraw or roll over into a new FD.
Current FD Rates in Sri Lanka (2026)
FD interest rates in Sri Lanka vary by bank and tenure. As of 2026, the best 12-month FD rate is 8.5% per annum from Pan Asia Bank, while the overall highest rate across all tenures is 9.5% per annum from Commercial Bank.
State banks (BOC, NSB, People's Bank) generally offer slightly lower rates than private commercial banks but provide stronger security backed by the government.
FD Tenures Available in Sri Lanka
Most Sri Lankan banks offer FDs across the following tenures:
- 1 Month / 3 Months: Short-term, lower rates, useful for parking funds temporarily
- 6 Months: Medium-short term, moderate rates
- 12 Months (1 Year): Most popular tenure - balances rate and flexibility
- 24 Months (2 Years): Higher rates, less flexibility
- 36 Months (3 Years): Typically among the highest rates
- 60 Months (5 Years): Longest standard tenure, best for long-term savings goals
State Banks vs. Private Banks - Which is Safer?
Both state banks and licensed private banks are safe for FD investments in Sri Lanka, but there are important differences:
| Factor | State Banks | Private Banks |
|---|---|---|
| Examples | BOC, NSB, People's Bank | ComBank, Sampath, HNB, Seylan |
| Government backing | Yes (implicit/explicit) | No |
| Deposit insurance | SLDILSS covered | SLDILSS covered |
| Interest rates | Slightly lower | Slightly higher |
| Risk level | Very low | Low |
Tax on FD Interest in Sri Lanka
Interest earned on fixed deposits in Sri Lanka is subject to Withholding Tax (WHT), which is deducted at source by the bank before crediting interest to you. The WHT rate depends on your tax residency and the applicable tax laws at the time. Resident individuals are generally taxed at the standard WHT rate, while non-residents may be subject to a different rate under relevant tax treaties.
Always factor in WHT when comparing FD returns. A higher gross rate may not always translate to a higher net return depending on your tax situation.
Can You Break an FD Early?
Yes, but there is usually a penalty. Breaking a fixed deposit before maturity (premature withdrawal) typically results in:
- A reduction in the interest rate - usually the bank pays the rate applicable for the period already elapsed, minus a penalty percentage
- Some banks charge an additional flat fee
- You still receive your principal in full
If you think you may need the funds before maturity, consider shorter tenures or ask your bank about their premature withdrawal policy before opening the deposit.
How to Open a Fixed Deposit in Sri Lanka
- Choose a bank: Use our rate comparison tool to find the best rate for your tenure and amount.
- Prepare documents: National Identity Card (NIC) or passport, a recent utility bill or bank statement for address proof, and your existing bank account details.
- Visit the branch or go online: Most banks allow FD opening at any branch. Several banks also offer online FD opening through their internet banking platforms.
- Fill the application form: Provide your personal details, deposit amount, tenure, and interest payout preference.
- Make the deposit: Transfer funds from your savings account or pay by cheque.
- Receive your FD certificate: The bank will issue a Fixed Deposit Receipt (FDR) which serves as proof of your deposit.
Frequently Asked Questions
Is a fixed deposit safe in Sri Lanka?
Yes. FDs at CBSL-licensed banks are covered by the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS). State bank FDs carry additional implicit government backing.
What is the minimum amount for an FD in Sri Lanka?
It varies by bank. Most banks accept deposits from LKR 1,000 to LKR 25,000 as the minimum. Special rate FDs may require higher minimums.
Can I use my FD as collateral for a loan?
Yes. Most Sri Lankan banks offer loans against FDs up to 90% of the deposit value at a low interest rate, allowing you to access liquidity without breaking the deposit.
What happens when an FD matures?
At maturity, the bank will contact you with options to withdraw the funds or roll them over into a new FD. If you take no action, most banks auto-renew at the prevailing rate.
Do senior citizens get better FD rates?
Yes. Most Sri Lankan banks offer an additional 0.5% to 1.0% per annum for depositors aged 60 and above.
Ready to find the best rate?
Use our free tools to compare FD rates across all major Sri Lankan banks.
This guide is for informational purposes only and does not constitute financial advice. Rates and policies change - always verify current terms directly with your bank or a qualified financial advisor before investing.