PSU banks Vs Post office; Which offers better returns?

Written by: Sneha.B.K

PSU banks Vs Post office; Which offers better returns?
The government recently hiked the interest rates on small savings and post office time deposits. We compare the post office interest rates with public sector undertaking banks (PSU banks). Pertinently, both offer immense security as they are government owned.

How interest rate yields compare

Bank Tenure Interest rates
SBI 1 year -5 years 9.25%
PNB 1 year
1year -5 years
BOB 1 year
1 year-5 years
IDBI Bank 1 year
1 year-5years

Post Office Schemes Tenure Interest rates
 Time Deposits
1 year 7.70%
 Time Deposits
1-5 years 7.70%- 8.50%


In terms of service, PSU Banks can be considered far superior to services availed at Post Offices. Also, technology at Post Offices is yet not upgraded, leaving issues like online redemption.

Tax Exemption

In both the cases of Post office Time Deposits and Bank Deposits the interest income is taxed.


In all respects Bank deposits seems more favorable, on account of their superior returns and better service.

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