Public sector banks (PSBs) continue to offer relatively conservative fixed deposit (FD) interest rates compared with several private banks, small finance banks and NBFCs. For regular customers, the highest rate among the major PSU lenders covered is 6.75%.
For investors who value the stability associated with public sector banks and want predictable returns, these FDs can still be worth considering. However, the interest rate can vary significantly depending on the deposit tenure.
According to FD rate data available as of September 9, 2026, here is a comparison of SBI, PNB, Bank of Baroda, Bank of India and Indian Overseas Bank.
Bank of Baroda Offers the Highest PSU FD Rate
Among the major public sector banks in the comparison, Bank of Baroda offers the highest interest rate for regular depositors at 6.75% on a 555-day FD.
Bank of India comes next with a maximum rate of 6.70% for a three-year deposit. Punjab National Bank (PNB) and Indian Overseas Bank (IOB) offer rates of up to 6.60%, applicable to specific tenures.
Meanwhile, State Bank of India (SBI) offers a maximum regular-customer rate of 6.45% on a 444-day deposit.
Maximum FD Rates at Major PSU Banks
| Bank | Highest Regular Rate | Applicable Tenure |
|---|---|---|
| Bank of Baroda | 6.75% | 555 days |
| Bank of India | 6.70% | 3 years |
| PNB | 6.60% | 444 days |
| Indian Overseas Bank | 6.60% | 444 days |
| SBI | 6.45% | 444 days |
One-Year FD: BOI and IOB Offer 6.50%
If your investment horizon is specifically one year, Bank of India and Indian Overseas Bank are ahead of the other PSU lenders in this comparison.
Both banks offer 6.50% on one-year deposits, while Bank of Baroda, PNB and SBI offer 6.25%.
For example, a ₹5 lakh one-year FD at 6.50% would generate approximately ₹32,500 in interest, compared with around ₹31,250 at 6.25%, before taxes and assuming the applicable rate remains unchanged for the full tenure.
| 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 Banks Offer Higher FD Returns
The difference becomes more noticeable when PSU banks are compared with private-sector lenders.
IDFC First Bank offers a maximum regular-customer rate of 7.10%, while Bandhan Bank offers up to 7.45% and Yes Bank up to 7.25% on selected maturities.
This means investors willing to consider private banks may find higher FD returns than those available from the major PSU lenders.
Small Finance Banks Offer Rates Above 8%
Small finance banks are offering some of the highest FD rates in the comparison.
Jana Small Finance Bank and Shivalik Small Finance Bank offer rates of up to 8%. Suryoday Small Finance Bank goes as high as 8.25%, while Ujjivan Small Finance Bank offers up to 7.80%.
Utkarsh Small Finance Bank offers a maximum of 8.10%, while Unity Small Finance Bank offers up to 8%.
Investors should remember that these top rates generally apply only to specific deposit periods and conditions.
NBFC FDs Also Offer Higher Maximum Rates
Some NBFC fixed deposits are also offering higher peak rates than major PSU banks.
Shriram Finance offers up to 7.50%, followed by Mahindra Finance at 7.45% and Bajaj Finance at 7.40% for regular depositors on selected tenures.
PSU vs Private vs Small Finance Bank FD Rates
| Bank/Institution | Category | Highest Regular Rate | Senior Citizen Rate |
|---|---|---|---|
| Bank of Baroda | PSU | 6.75% | 7.25% |
| Bank of India | PSU | 6.70% | 7.45% |
| PNB | PSU | 6.60% | 7.10% |
| SBI | PSU | 6.45% | 7.05% |
| Indian Overseas Bank | PSU | 6.60% | 7.10% |
| 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 Additional FD Interest
Senior citizens generally receive an additional interest benefit on fixed deposits, making the comparison slightly different for this category.
Among the five PSU banks covered, Bank of India offers the highest maximum senior-citizen rate at 7.45%. Bank of Baroda offers up to 7.25%, while PNB and Indian Overseas Bank offer maximum rates of 7.10%.
SBI offers up to 7.05% for senior citizens on eligible deposits.
Should You Choose a PSU Bank FD?
PSU bank FDs may not provide the highest interest rates in the market, but they can appeal to investors who place greater importance on the bank’s profile and steady, fixed-income returns.
However, investors should not compare FDs solely on the headline maximum rate. The tenure attached to that rate is equally important. A bank’s highest FD rate may apply only to a particular maturity period, while shorter or longer deposits could carry a different interest rate.
Before investing, compare the tenure, interest rate, senior-citizen benefit, premature withdrawal rules, taxation and overall deposit terms to determine which FD best suits your financial goals.