The Sri Lanka Fixed Deposit Guide

What a fixed deposit is

A fixed deposit (FD), also called a term deposit, is money you place with a bank or licensed finance company for an agreed period at an agreed interest rate. In return for not touching the money until the end of the term (maturity), you earn more than on a savings account. The rate is locked for the term, so later rate cuts do not affect you — and later rate rises do not help you either.

Sri Lankan FD rates are quoted per annum and paid as simple interest over the term. A 6-month deposit at 10% p.a. earns 5% of the principal, not 10%.

Where rates stand today

AnyBanq currently tracks fixed deposit rates from 45 banks and finance companies. For a standard 12-month LKR deposit the average rate is 10.31% and the best is 13.50% at Richard Pieris Finance. The best bank rate is 12.00% at Cargills Bank.

See how these have moved on the FD rate history page.

Choosing a tenure

Institutions offer terms from one month to five years. Longer terms usually pay more, but the extra rate is the price of giving up access to your money. Start from when you will need the money — a house deposit next year, school fees in six months — and pick the term that ends just before then.

• 1–6 months: an emergency buffer or money you expect to need soon; also useful if you think rates will rise.
• 12 months: the most compared tenure and a sensible default when you have no strong view on rates.
• 2–5 years: locks in today's rate if you expect rates to fall, at the cost of flexibility and early-withdrawal penalties.

Compare rates for your exact tenure: an institution that leads at 12 months may be average at 3 months. Our comparison table lets you switch tenure and rank every institution instantly.

Banks vs licensed finance companies

Both licensed banks and licensed finance companies (LFCs) can accept fixed deposits, and both are regulated by the Central Bank of Sri Lanka (CBSL). Finance companies typically pay more because they rely more heavily on deposits to fund lending and generally carry more credit risk. Today the best 12-month rate at a bank is 12.00% and at a finance company 13.50%.

State-owned banks are often chosen for perceived safety, but they do not always pay the lowest rates. Compare the bank FD rates and the finance company FD rates separately, then weigh the difference against each institution's credit rating.

Is my deposit safe?

Only deposit with an institution that appears on the CBSL's lists of licensed commercial banks, licensed specialised banks or licensed finance companies. Accepting deposits without a licence is illegal in Sri Lanka, and schemes that promise unusually high returns outside the licensed sector have cost savers heavily.

Deposits at licensed banks and finance companies are covered by the Sri Lanka Deposit Insurance Scheme (SLDIS), run by the CBSL, up to a maximum amount per depositor per institution. The limit is set by the CBSL and has been revised over time, so confirm the current figure on the CBSL website. Amounts above the limit depend on the institution's own strength — which is why credit ratings matter for large deposits.

Our safe investing guide explains how to check a licence, read a credit rating and spot an unauthorised deposit scheme.

Tax on FD interest (AIT)

Banks and finance companies deduct Advance Income Tax (AIT) of 10% from interest paid to resident individuals and pay it to the Inland Revenue Department on your behalf. The figure you are quoted is the gross rate, so your take-home rate is 90% of it.

AIT is a prepayment of income tax, not necessarily the final amount. If your total income is below the tax-free threshold you can usually give your bank a self-declaration so that AIT is not deducted; if you file a return, AIT already deducted is credited against your liability. Thresholds and forms change with budgets — confirm the current rules with the Inland Revenue Department or your bank. You can also estimate the deduction with our withholding tax calculator.

Monthly interest or at maturity

Most FDs let you take interest at maturity or as monthly (sometimes quarterly or annual) payments. Monthly interest suits retirees and anyone living on their savings; interest at maturity usually comes with a slightly higher rate and is simpler if you do not need the income. The rates we publish are the at-maturity rates unless a product says otherwise — ask the institution for its monthly-payout rate.

Senior citizen rates

Many banks and finance companies run separate senior-citizen fixed deposits for customers aged 60 or over, paying a premium above the standard rate. Across the 18 institutions that publish both, the senior rate at 12 months is on average 0.22 percentage points above the standard rate. Compare them on our senior citizen FD rates page.

Breaking an FD early

If you need the money before maturity, most institutions will release it but pay a reduced rate — typically the rate for the period you actually held the deposit, less a penalty — and some special products cannot be broken at all. If you might need part of the money, consider splitting it into several smaller FDs, or borrowing against the deposit instead of breaking it.

Borrowing against your FD

Most institutions lend against your own fixed deposit — as a loan or overdraft — at a rate a little above the FD rate, usually up to a high share of the deposit value. Your deposit keeps earning while it secures the loan. For short-term needs this is often cheaper than breaking the FD or taking an unsecured personal loan.

Inflation and your real return

What matters is what your money can buy at maturity. Subtract AIT, then compare your net rate with inflation over the same period: if net interest is below inflation, your purchasing power is falling even though the balance is growing. The CBSL publishes inflation figures monthly (CCPI and NCPI) on cbsl.gov.lk.

FD laddering

A ladder splits your savings across several FDs that mature at different times. For example, instead of putting LKR 1,200,000 into one 12-month FD, place LKR 400,000 each into 6, 12 and 24-month deposits, and reinvest each at the longest tenure as it matures. You always have a deposit coming free soon, while most of the money works towards the longer-term rate.

• Part of your money is always close to maturity, so emergencies rarely force an early withdrawal.
• You reinvest regularly, so you are never fully locked in at a low rate or fully exposed to a fall.
• Spreading deposits across institutions also keeps each one within the deposit insurance limit.

How to open a fixed deposit

1. 1

   Compare rates for your tenure

   Compare published rates for the exact tenure and payout you want, and shortlist two or three institutions. Compare FD rates →

2. 2

   Check the institution

   Confirm each institution is licensed by the Central Bank of Sri Lanka and look at its credit rating.

3. 3

   Prepare your documents

   Have your NIC (or passport) and proof of address ready. Existing customers can often open an FD online or in their banking app.

4. 4

   Choose the terms

   Choose the tenure, interest payout (monthly or at maturity) and what should happen at maturity (renew or pay out).

5. 5

   Handle tax and keep your record

   Submit the AIT self-declaration if you qualify, and keep the FD certificate or confirmation.

Checklist before you deposit

• ✓The rate quoted is for my exact tenure and payout option.
• ✓The institution is on the CBSL's licensed list.
• ✓My deposit at this institution is within the insurance limit — or I am comfortable with its credit rating.
• ✓I know the early-withdrawal terms.
• ✓I know what happens at maturity (auto-renewal or pay-out).
• ✓I have worked out my return after 10% AIT.

This guide is general information, not financial or tax advice. Rates, tax rules and deposit insurance limits change; confirm the details with the institution, the CBSL and the Inland Revenue Department before you decide. Read our methodology.