Indian Bank hikes special FD rates to 6.80%: How it compares with PSUs, private banks, small finance banks

Indian Bank has raised interest rates on two special fixed deposit (FD) schemes by 15 basis points, taking the rate on its 555-day Ind Grow deposit to 6.80% and that on its 777-day Ind Prosper deposit to 6.75%, effective October 23, 2026. The revision comes as depositors continue to compare returns across public sector banks, private lenders and small finance banks.

The revised 555-day rate puts Indian Bank close to the highest rates offered by public sector lenders, although some private and small finance banks offer higher headline returns on specific tenures.

According to the bank-rate comparison data dated October 21, Bank of India offered up to 6.85% on a 999-day deposit, while Bank of Baroda offered 6.75%. Punjab National Bank and Canara Bank offered maximum rates of 6.60% each. Indian Bank's revised 6.80% rate is therefore competitive within the public sector banking segment.

How Indian Bank compares with other banks

The following table compares selected headline rates across bank categories. These are maximum rates for specific tenures, not necessarily rates available for deposits of 555 or 777 days.

Bank category	Bank	Maximum FD rate	Tenure
Public sector	Bank of India	6.85%	999 days
Public sector	Indian Bank	6.80%	555 days
Public sector	Bank of Baroda	6.75%	555 days
Private sector	Bandhan Bank	7.45%	2 years
Private sector	IDFC FIRST Bank	7.10%	500 days to 3 years
Small finance bank	Suryoday Small Finance Bank	8.25%	5 years
Small finance bank	Utkarsh Small Finance Bank	8.10%	666 days
Small finance bank	Jana Small Finance Bank	8.00%	3 years

Source: Bank-rate comparison data dated October 21, 2026, and the updated Indian Bank rates effective October 23, 2026. Rates and tenures should be confirmed with the respective banks before booking.

Small finance banks offer higher headline rates

The comparison shows that small finance banks offer higher maximum rates than Indian Bank, although the highest rates may require substantially longer investment periods. Suryoday Small Finance Bank's 8.25% rate, for instance, applies to a five-year deposit, while Indian Bank's revised 6.80% rate is for 555 days.

Private sector lenders also offer higher headline rates in some cases. Bandhan Bank's maximum regular rate of 7.45% applies to a two-year deposit, while IDFC FIRST Bank offers up to 7.10% across specified tenures.

However, comparing only the highest advertised rates can be misleading. Depositors should check the rate available for their intended investment period, along with premature withdrawal conditions and interest payout options.

How much difference does the interest rate make?

On a deposit of ₹1 lakh, a 6.80% annual rate translates to approximately ₹6,800 in interest over one year, assuming a simple annualised calculation. At 8.25%, the corresponding figure would be ₹8,250, a difference of ₹1,450.

Actual FD returns will depend on the tenure, compounding frequency, payout option and applicable tax.

Depositors should also consider deposit safety. Eligible bank deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per depositor per bank, including principal and interest, subject to the applicable rules.

Indian Bank's revised rates make its special-tenure deposits competitive among public sector lenders. However, depositors seeking the highest returns should compare rates across bank categories without overlooking tenure, liquidity needs and deposit insurance limits.