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 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.

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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

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.

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