Interest rates on government bank deposits have fallen and it is extremely difficult to get decent interest rates. The Reserve Bank of India has cut interest rates and so have banks. Banks like State Bank of India today offer very low interest rates on deposits.
We have now selected a list of government banks that offer you the best interest rates on domestic deposits in 2017. Invest in them for 3-5 years to lock money at higher interest rates.
Union Bank by far offers you the best interest rate when it comes to government banks in India. This large public sector bank offers you an interest rate of of 7.25 per cent on a 1-3 year deposit. The interest rate drops to about 7.05 per cent for less than one year and for most of the other time frames it is much lower than this. So, if you are investing we suggest that you look for the 1-3 year time frame.
State Bank of Mysore
It is very difficult for most of the other government banks to match the deposit interest rats of Union Bank of India. For example, the maximum interest rates that State Bank of Mysore offers on its term deposits is 7 per cent. This is more or less on par with some other banks, but it is much better than most other government banks. The bank offers an interest rate of 7 per cent on its 211 days to less than 1 year category.
Oriental Bank of Commerce
This is one of the few government owned banks that offers an interest rate of more than 7 per cent. The bank offers an interest rate of 7.15 per cent on deposits from 1-2 years. This is slightly below than Union Bank of India, but is much better than most other banks in the country. So, if you are looking to place money, we suggest that you put money in the 2 year scheme, as interest rates will fall.
State Bank of Patiala
Under a special deposit for the girl child, State Bank of Patiala offers an interest rate of 7 per cent. This is for a period of 18 years and should be opened in the name of the girl child. Nobody can predict where interest rates would go in the next few years, leave along 18 years.
This is another bank that offers an interest rate of just about 7 per cent. Remember, that interest rates on bank deposits are taxable, so your returns could fall even lower. We suggest that you can also look at company deposits, if you really want to make slightly more money from fixed deposits. These are also very much taxable.
Bank of India
Bank of India offers an interest rate of 7 per cent for 1-2 and three year tenures. This is more or less in line with the deposits of most other banks in the country. Private Banks have also aligned their interest rates to government banks and offer interest rates along the same lines. Only company fixed deposits offer you slightly higher interest rates, which can sometimes go upto to as higher as 8.75 per cent. However, there is always an element of risk in these deposits.