Interest rates in the economy have fallen dramatically in the last few quarters. In fact, bank interest income after tax liability, are almost at CPI inflation levels. This has given very little opportunity to get high real rate of returns.
In fact, most post office schemes are giving higher returns than bank deposits. Individuals are also looking at company fixed deposits that offer higher interest rates. Here are a few government bank deposits with the best interest rates.
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 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 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 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.
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.