PSU bank FD rates remain below 7%: SBI, PNB, BoB, Bank of India compared; what's the best you can get
Public-sector banks continue to offer FD rates below the returns available from several private and small finance banks, with the best regular-customer rate among major PSU lenders at 6.75%. For investors prioritising stability, here’s how SBI, PNB, Bank of Baroda and Bank of India compare, and what you can earn on deposits of up to ₹5 lakh.
- Sep 14, 2026,
- Updated Sep 14, 2026 4:35 AM IST
Public-sector banks continue to offer relatively conservative fixed deposit (FD) returns, with the best regular-customer rates remaining below 7%, even as private banks, small finance banks and NBFCs offer higher rates on select tenures. For investors prioritising the perceived stability of PSU banks, however, some options still offer competitive returns depending on the maturity period.
According to FD rate data as of September 9, Bank of Baroda offers the highest maximum rate among the major PSU lenders covered, at 6.75% for regular depositors on a 555-day tenure. Bank of India follows with a maximum of 6.70% for three years, while Punjab National Bank offers up to 6.60% for 444 days. State Bank of India offers a maximum regular rate of 6.45% for 444 days.
Indian Overseas Bank also offers a maximum regular rate of 6.60% for 444 days.
One-year rates: Bank of India and IOB lead
For investors specifically looking at a one-year FD, Bank of India and Indian Overseas Bank offer the highest rate among these PSU lenders at 6.50%. Bank of Baroda, PNB and SBI offer 6.25% for one-year deposits.
This means an investor putting ₹5 lakh into a one-year FD at 6.50% would earn roughly ₹32,500 in simple annual interest, compared with ₹31,250 at 6.25%, before taxes and assuming the quoted rate for the full year.
MUST READ: Corporate FDs: Muthoot offers 8.95%, Shriram 7.5%; what investors should know before investing
| Deposit amount | At 6.50%: BOI/IOB | At 6.25%: BoB/PNB/SBI |
|---|---|---|
| ₹50,000 | ₹3,250 | ₹3,125 |
| ₹1 lakh | ₹6,500 | ₹6,250 |
| ₹2 lakh | ₹13,000 | ₹12,500 |
| ₹5 lakh | ₹32,500 | ₹31,250 |
Private and small finance banks offer more
The gap becomes more visible when PSU banks are compared with private and small finance banks. IDFC First Bank offers a maximum regular rate of 7.10%, while Bandhan Bank offers 7.45% and Yes Bank 7.25% on select tenures.
Small finance banks are considerably more aggressive. Jana Small Finance Bank offers up to 8%, Shivalik Small Finance Bank 8%, Suryoday Small Finance Bank 8.25%, Ujjivan 7.80%, Utkarsh 8.10% and Unity Small Finance Bank 8%.
NBFCs also sit above most PSU banks on their top rates. Shriram Finance offers up to 7.50%, Mahindra Finance 7.45% and Bajaj Finance 7.40% for regular depositors on specified tenures.
FD rates: PSU vs private vs small finance banks
| Bank | Category | Highest rate (Regular) | Tenure | 1-year rate | Highest rate (Senior Citizen) | Senior tenure |
|---|---|---|---|---|---|---|
| Bank of Baroda | PSU | 6.75% | 555 days | 6.25% | 7.25% | 555 days |
| Bank of India | PSU | 6.70% | 3 years | 6.50% | 7.45% | 3 years |
| PNB | PSU | 6.60% | 444 days | 6.25% | 7.10% | 444 days |
| SBI | PSU | 6.45% | 444 days | 6.25% | 7.05% | 444 days |
| Indian Overseas Bank | PSU | 6.60% | 444 days | 6.50% | 7.10% | 444 days |
| IDFC First Bank | Private | 7.10% | — | — | 7.60% | — |
| Bandhan Bank | Private | 7.45% | — | — | 7.95% | — |
| Yes Bank | Private | 7.25% | — | — | 7.75% | — |
| Jana Small Finance Bank | Small finance | 8.00% | — | — | 8.50% | — |
| Suryoday Small Finance Bank | Small finance | 8.25% | — | — | 8.50% | — |
| Ujjivan Small Finance Bank | Small finance | 7.80% | — | — | 8.30% | — |
| Utkarsh Small Finance Bank | Small finance | 8.10% | — | — | 8.60% | — |
| Bajaj Finance | NBFC | 7.40% | — | — | 7.75% | — |
| Shriram Finance | NBFC | 7.50% | — | — | 8.00% | — |
| Mahindra Finance | NBFC | 7.45% | — | — | 7.80% | — |
Senior citizens get a higher rate
The difference narrows somewhat for senior citizens, who receive additional interest across the PSU lenders. Bank of India offers the highest maximum rate among the five at 7.45%, followed by Bank of Baroda at 7.25%, while SBI offers up to 7.05%. PNB and Indian Overseas Bank offer maximum rates of 7.10%.
For conservative investors, therefore, PSU-bank FDs may not offer the highest headline yield, but they remain relevant for those prioritising bank profile and predictable fixed-income returns. The key is to compare tenure-specific rates rather than simply chasing the highest advertised number, since the maximum rate at each lender may apply only to a particular maturity.
MUST READ: Silver surged 98%, but investors made just 18%: How FOMO turned a rally into a trap
ALSO READ: Child’s PPF account: Parents cannot deposit ₹1.5 lakh each — Know the combined limit
Public-sector banks continue to offer relatively conservative fixed deposit (FD) returns, with the best regular-customer rates remaining below 7%, even as private banks, small finance banks and NBFCs offer higher rates on select tenures. For investors prioritising the perceived stability of PSU banks, however, some options still offer competitive returns depending on the maturity period.
According to FD rate data as of September 9, Bank of Baroda offers the highest maximum rate among the major PSU lenders covered, at 6.75% for regular depositors on a 555-day tenure. Bank of India follows with a maximum of 6.70% for three years, while Punjab National Bank offers up to 6.60% for 444 days. State Bank of India offers a maximum regular rate of 6.45% for 444 days.
Indian Overseas Bank also offers a maximum regular rate of 6.60% for 444 days.
One-year rates: Bank of India and IOB lead
For investors specifically looking at a one-year FD, Bank of India and Indian Overseas Bank offer the highest rate among these PSU lenders at 6.50%. Bank of Baroda, PNB and SBI offer 6.25% for one-year deposits.
This means an investor putting ₹5 lakh into a one-year FD at 6.50% would earn roughly ₹32,500 in simple annual interest, compared with ₹31,250 at 6.25%, before taxes and assuming the quoted rate for the full year.
MUST READ: Corporate FDs: Muthoot offers 8.95%, Shriram 7.5%; what investors should know before investing
| Deposit amount | At 6.50%: BOI/IOB | At 6.25%: BoB/PNB/SBI |
|---|---|---|
| ₹50,000 | ₹3,250 | ₹3,125 |
| ₹1 lakh | ₹6,500 | ₹6,250 |
| ₹2 lakh | ₹13,000 | ₹12,500 |
| ₹5 lakh | ₹32,500 | ₹31,250 |
Private and small finance banks offer more
The gap becomes more visible when PSU banks are compared with private and small finance banks. IDFC First Bank offers a maximum regular rate of 7.10%, while Bandhan Bank offers 7.45% and Yes Bank 7.25% on select tenures.
Small finance banks are considerably more aggressive. Jana Small Finance Bank offers up to 8%, Shivalik Small Finance Bank 8%, Suryoday Small Finance Bank 8.25%, Ujjivan 7.80%, Utkarsh 8.10% and Unity Small Finance Bank 8%.
NBFCs also sit above most PSU banks on their top rates. Shriram Finance offers up to 7.50%, Mahindra Finance 7.45% and Bajaj Finance 7.40% for regular depositors on specified tenures.
FD rates: PSU vs private vs small finance banks
| Bank | Category | Highest rate (Regular) | Tenure | 1-year rate | Highest rate (Senior Citizen) | Senior tenure |
|---|---|---|---|---|---|---|
| Bank of Baroda | PSU | 6.75% | 555 days | 6.25% | 7.25% | 555 days |
| Bank of India | PSU | 6.70% | 3 years | 6.50% | 7.45% | 3 years |
| PNB | PSU | 6.60% | 444 days | 6.25% | 7.10% | 444 days |
| SBI | PSU | 6.45% | 444 days | 6.25% | 7.05% | 444 days |
| Indian Overseas Bank | PSU | 6.60% | 444 days | 6.50% | 7.10% | 444 days |
| IDFC First Bank | Private | 7.10% | — | — | 7.60% | — |
| Bandhan Bank | Private | 7.45% | — | — | 7.95% | — |
| Yes Bank | Private | 7.25% | — | — | 7.75% | — |
| Jana Small Finance Bank | Small finance | 8.00% | — | — | 8.50% | — |
| Suryoday Small Finance Bank | Small finance | 8.25% | — | — | 8.50% | — |
| Ujjivan Small Finance Bank | Small finance | 7.80% | — | — | 8.30% | — |
| Utkarsh Small Finance Bank | Small finance | 8.10% | — | — | 8.60% | — |
| Bajaj Finance | NBFC | 7.40% | — | — | 7.75% | — |
| Shriram Finance | NBFC | 7.50% | — | — | 8.00% | — |
| Mahindra Finance | NBFC | 7.45% | — | — | 7.80% | — |
Senior citizens get a higher rate
The difference narrows somewhat for senior citizens, who receive additional interest across the PSU lenders. Bank of India offers the highest maximum rate among the five at 7.45%, followed by Bank of Baroda at 7.25%, while SBI offers up to 7.05%. PNB and Indian Overseas Bank offer maximum rates of 7.10%.
For conservative investors, therefore, PSU-bank FDs may not offer the highest headline yield, but they remain relevant for those prioritising bank profile and predictable fixed-income returns. The key is to compare tenure-specific rates rather than simply chasing the highest advertised number, since the maximum rate at each lender may apply only to a particular maturity.
MUST READ: Silver surged 98%, but investors made just 18%: How FOMO turned a rally into a trap
ALSO READ: Child’s PPF account: Parents cannot deposit ₹1.5 lakh each — Know the combined limit