Green Fixed Deposits in India 2026: RBI's Green Deposit Framework, Which Banks Offer It, and Do You Actually Earn More

By Nitish Bharadwaj · Published Jul 26, 2026 · 6 min

RBI's Framework for Acceptance of Green Deposits, in force since June 2023, lets scheduled banks and deposit-taking NBFCs raise fixed deposits earmarked for renewable energy, clean transport, and other green-finance projects. SBI's Green Rupee Term Deposit — sold in 1111, 1777, and 2222-day tenures — currently pays the same card rate as a regular FD of matching tenure, but the framework sets no floor, so other banks' green FDs can pay less. Interest is fully taxable and DICGC-insured exactly like any other bank FD; the only real difference is that RBI requires annual third-party verification of how the money was actually used.

Eight state-owned banks alone raised over ₹3,700 crore through green deposits in FY26 — roughly double what they raised the year before — as more lenders roll out a fixed deposit that earmarks your money for renewable energy, clean transport, and similar projects. The pitch sounds like a premium product: better returns for a better planet. In practice, RBI's rulebook doesn't promise you a single extra rupee for going green, and on at least one large bank's flagship product, the rate is identical to a plain FD of the same tenure. Here's what a green FD actually is, which banks sell one, and what genuinely changes when you pick it over a regular deposit.

What a Green Fixed Deposit Actually Is

A green FD works exactly like a regular fixed deposit from the depositor's side — you lock in a sum for a fixed tenure and earn interest. The difference sits entirely on the bank's side of the ledger. Under RBI's Framework for Acceptance of Green Deposits, in effect since June 1, 2023, any scheduled commercial bank (including small finance banks, but not regional rural banks, local area banks, or payments banks) and any deposit-taking NBFC or housing finance company can raise green deposits — but only on the condition that the money raised gets earmarked and tracked toward specific green-finance activities, not lent out or invested for general purposes.

What Counts as 'Green' — and What RBI Explicitly Rules Out

This exclusion list matters because it's what stops a bank from labelling a deposit 'green' and then quietly using the proceeds for anything else. RBI also requires every regulated entity to have its green-deposit fund allocation independently, third-party verified once a year, and to place a report — covering how much was raised, which projects the money went to, and an impact assessment — before its board within three months of the financial year ending. That verification is disclosed in the bank's annual financial statements, giving depositors a level of visibility into fund use that a regular FD simply doesn't offer.

Which Banks Sell a Green FD in 2026

• State Bank of India — the SBI Green Rupee Term Deposit, sold in three fixed tenures: 1111 days, 1777 days, and 2222 days
• HDFC Bank, IndusInd Bank, Union Bank of India, Federal Bank, and IDFC First Bank — each running their own green or sustainable deposit variant
• AU Small Finance Bank — among the first small finance banks to launch a dedicated green FD

Do You Actually Earn More With a Green FD?

Not automatically, and this is the single biggest misconception around this product. RBI's framework regulates what the money can be used for and how that use gets verified — it says nothing about pricing. A bank is free to price a green FD the same as, above, or below its regular FD card rate for the same tenure, and different banks have made different choices since the framework launched in 2023. Some early green deposit launches priced marginally below the equivalent regular FD, on the logic that green project financing is cheaper for the bank to source; SBI's current approach is to match its card rate exactly. The only reliable way to know is to pull up the specific bank's green-FD rate card and its regular FD rate card for the same tenure, side by side, before you commit.

This also means a green FD is not a substitute for shopping around. If you're chasing the highest fixed-income yield first and impact second, comparing a green FD's rate against a small finance bank FD or a company deposit of similar tenure — with appropriate weight given to the extra risk those carry — usually matters more than the green label itself.

Tax Treatment Is Identical to a Regular FD

A green FD gets no special tax status. Interest earned is fully taxable at your slab rate under 'Income from Other Sources,' and banks apply TDS under the same Section 194A rules that govern any other fixed deposit — 10% once your cumulative FD interest from that bank crosses ₹50,000 in a year (₹1,00,000 for senior citizens), or 20% without a PAN on file. There's no additional exemption, no green-specific 80C benefit, and the 80TTA/80TTB deduction that applies to a limited slice of savings and FD interest for senior citizens applies here exactly as it would to any other bank FD — no more, no less.

Should You Actually Choose One?

If a bank's green FD pays the same rate as its regular FD of matching tenure — as SBI's currently does — there's no financial downside to picking the green option, and you get the added, if modest, benefit of RBI-mandated visibility into what your money is funding through the bank's annual disclosure and third-party verification report. If a bank's green FD pays visibly less than its own regular FD, treat the rate gap as the real cost of that transparency and impact allocation, and decide whether that trade-off is worth it to you — the same way you'd weigh any other rate difference before locking money in for years at a stretch.