Govt Banks That Offer The Highest & Best Interest Rates On Fixed Deposits (Fds)

Interest rates have been rising over the last few quarters. There are hopes that interest rates would continue to rise going forward. Here are 2 government banks and one from the private sector that offer the best and highest interest rates on fixed deposits.

Punjab National Bank: Highest interest rates from Govt Bank

At the moment there is no other government bank that offers an interest rate beyond 8%, but, PNB or Punjab National Bank. Super Senior citizens would receive an interest rate of 8.05% on a 666-days deposit, while for the same tenure senior citizens receive an interest rate of 7.75%. Regular deposits fetch an interest rate of 7.25%, which is also not bad at all. The only problem with these Fds is that the tenure is less than 2-years, being only 666 days. So, if interest rates fall over the next 1-2 years, which they would for sure, you are locking into deposits for a period of 22-months or thereabouts. We would suggest investors to look for 3-5 year tenures.

Union Bank of India FD rates are the best for regular deposits

If you are not a senior citizen, then the rates being offered by Union Bank of India is the best on Fds with a tenure of 3-years among government owned banks. The 3-year fixed deposits offer an interest rate of 7.30%. The other good thing is that the tenure is for a slightly higher time frame of 3-years, which is good. Union Bank of India is also owned by the Government of India as a majority shareholder, which offers the comfort of safety. If you are looking at a 700-day tenure at the bank, the interest rates offered is 7.25%, which is also decent in the present context. We would advocate the 3-year deposits as interest may fall in the next 1-2 years.

IDFC First Bank: Attractive deposit rates

To begin with this is not a government owned bank, but, a private sector bank. However, we chose to recommend Fds as the interest rates are attractive for regular deposits and senior citizens. Also, the interest rates are good for the slightly longer term which is one reason to recommend the same. The 18-months-1 day to 3-years deposit offers an interest rate of 7.5% for regular citizens and 8% for senior citizens. This is a relatively strong private sector player and hence deposit risks are minimal. In any case, deposits up to Rs 5 lakhs are insured. Good deposits for those looking for a tenure of 2-3 years.