How Long Will Rs 5 Lakh Fixed Deposit Take To Make Rs 1 Crore?

When it comes to safe and steady investing, fixed deposits (FD) remain a popular choice. They are predictable and free from market fuss. For many, reaching the Rs 1 crore mark is a long-term goal, and an FD seems like the reliable route to get there. So, if you have got Rs 5 lakh to start with, how long will it actually take for that amount to turn into Rs 1 crore? Let us find out.

Small finance banks are offering rates of 8% to 9% pa, with some up to around 9.1 % for senior citizens on 5-year FDs.

Larger banks like SBI are offering up to about 7.5 %‑8%, while SBI recently cut short‑term FD rates to around 6 %.

Some newer offers reach around 6.75-6.9%.

Realistic effective FD rates today typically fall between 7% and 9% per annum, compounded quarterly.

We use the compound interest formula -

A = P × (1 + r/n)^(n×t)

where:
P = Rs 5 lakh (initial principal)
r = annual interest rate (decimal)
n = compounding frequency (usually 4 for quarterly)
t = time in years
A = final amount (Rs 1 crore in this case)

By this calculation, if you invest Rs 5 lakh in a fixed deposit with quarterly compounding, at an interest rate of 9% per annum, it will take roughly 30 years to grow to Rs 1 crore.

At 8%, the time stretches to around 32 years.

And if the rate is 7%, you will need to wait about 34 to 35 years.

So depending on the rate, you are looking at a time range of 30 to 35 years for your Rs 5 lakh to turn into Rs 1 crore.

Here are a few key points to remember before locking in your money in a fixed deposit.

FD interest is typically compounded quarterly, not annually, which slightly boosts returns over time. 

Interest earned on FDs is taxable. If it crosses Rs 10,000 in a year (Rs 40,000 for senior citizens), banks deduct TDS (Tax Deducted at Source), which reduces your overall earnings. So, while the advertised rate might sound attractive, the post-tax return is usually lower than what you expect.

On the brighter side, senior citizens often get an additional 0.5% interest from many banks, which can make a noticeable difference over the long term.

Another thing to consider is deposit insurance. Only Rs 5 lakh per bank is insured by the DICGC (Deposit Insurance and Credit Guarantee Corporation). This means if you are investing more than Rs 5 lakh, it is safer to spread it across multiple banks to reduce risk.