State Bank of Mysore

State Bank of Mysore offers an interest rate of 7.60 per cent on a 1-2 year FDs. This is the highest that a government bank gives on Fixed Deposits.

Remember, your returns would fall post tax, which means the returns are pretty low overall, after tax. 

Union Bank of India

The interest rate on Union Bank of India fixed deposit is 7.55 per cent for 1-3 years deposits. This is the best from a government bank for this tenure after State Bank of Mysore.

The interest rate on the banks 3-5 year deposit is just 7.50 per cent, which is what all banks are offering.

Bank of Maharahstra Mahanidhi Deposits

Mahanidhi deposits from Bank of Maharashtra offers an interest rate of 7.51 per cent for 444 days.

This is marginally higher than what most government banks offer.

IDBI Bank

IDBI Bank offers an interest rate of 7.50 per cent on its 1-3 year deposits.

The interest rate on the other tenures are much lower and hence if you are investing, look at 1-3 years deposit.

Canara Bank

Canara Bank of offering an interest rate of 7.50 per cent on its above 1 year to less than 2 years deposit.

Remember, that there would be a TDS that is applicable on interest above Rs 10,000.

Corporation Bank

Corporation Bank of is offering an interest rate of 7.50 per cent on deposits of 1 to less than 3 years. This is on par with what most banks in the country are offering.

Others

Most other government banks offer a maximum of 7 to 7.4 per cent on their deposits.

However, private sector banks too offer similar interest rates.