SBI, HDFC Bank FD Rates Vs Stocks: Is It Better To Do Fixed Deposits Or Buy These Banks' Stocks? Find Out!

The majority of banks have revised their fixed deposit interest rates after the RBI trimmed the repo rate by 50 basis points in the June policy. However, large-cap banks like SBI and HDFC Bank shares have given far better returns than their FD rates. Let's do a comparison!

SBI FD Rates:

With effect from June 15, 2025, SBI is offering a 6.25% rate on 1 Year to less than 2 years of tenure, while the rates are at 6.45% on 2 years to less than 3 years, at 6.30% on 3 years to less than 5 years, and at 6.05% on 5 years and up to 10 years. These interest rates are for the general category.

The rates are higher if the depositor is a senior citizen, ranging from 6.75% to 7.05% on tenures from 1 year to 10 years.

Using the SBI calculator, let's suppose a depositor opened an FD account with a Rs 1 lakh deposit and a maturity period of 5 years. Let's suppose you're expecting a 6% rate on a 5-year tenure; then your corpus is Rs 134,685 at the end of maturity, with interest gains around Rs 34,685.

SBI Share Price:

But the SBI share price has recorded nearly 337% returns in 5 years to date. The stock was once Rs 184.70 on July 3, 2020. Currently, it is at Rs 807 on NSE. SBI is the largest PSU bank and third-largest bank in India, with a market cap of more than Rs 7.20 lakh crore.

For example: If you had invested Rs 1 lakh on July 3, 2020, and held it till July 3, 2025. Then at 336.92% gains, your corpus would have been Rs 436,920 in SBI shares, with gains amounting to Rs 336,920. This is excluding capital gains, broker fees or any other charges.

SBI Share Price Recommendation:

As per Trendlyne data, the consensus recommendation from 42 analysts for State Bank of India is BUY. Of the total, 28 analysts have recommended 'STRONG BUY', while 6 analysts have suggested BUY. The average target price is at Rs 927.94, indicating nearly 15% potential upside ahead.

According to Motilal Oswal, SBIN's deposits grew 9.5% YoY in FY25, maintaining a dominant 24% market share while the bank remains focused on increasing CASA deposits. With a favorable domestic CD ratio of 69.7%, well below peers, and a comfortable LCR of 133%, the bank is well-positioned for sustainable credit growth supported by robust underwriting and a potential corporate capex recovery. The incremental cost of deposits is also expected to come down as MCLR readjustment will also happen.

Thus, Motilal expects ~10% CAGR in deposits over FY25-27, while the bank maintains its focus on garnering granular retail deposits.

On the valuation, Motilal's note said, "SBIN has delivered a robust set of performances in recent years, propelled by steady business and revenue growth as well as controlled provisions. NIM has contracted in recent quarters, and the management has guided for broadly stable margins (negative bias depending on the quantum and timing of rate cuts). The bank has levers in place (CD ratio, MCLR re-pricing, asset mix improvement, etc.) to mitigate the impact arising from moderation in lending yields. SBIN's asset quality remains healthy with consistent improvements in headline asset quality ratios, while the restructured book remains under control at 0.3% of loans. We estimate credit costs to remain in check at ~50bp, enabling a 6% earnings CAGR over FY25-27. We, thus, estimate SBIN to deliver RoA/RoE of ~1.0%/15.9% in FY27. SBIN remains our preferred BUY in the sector with a TP of INR925 (premised on 1.2x FY27E ABV+ INR245 for subsidiaries)."

HDFC Bank FD Rates:

HDFC Bank has also revised its FD rates with effect from June 25, 2025. In the general category, HDFC Bank offers the highest rate of 6.60% on 21 months - 2 years tenure, while 6.45% is offered on tenures from 21 months to less than or equal to 3 years. The rates are 6.40% on 3 Years 1 day to less than 5 years tenure and 6.15% on 5 Years 1 day to 10 Years tenures. To senior citizens, these rates range from 7.10% to 6.65%.

Using the HDFC Bank FD calculator, taking the same example as SBI. At Rs 1 lakh FD for a 5-year tenure, the rate is 6.40%. The corpus would be Rs 137,363, of which Rs 37,363 is the interest earned.

HDFC Bank Share Price:

HDFC Bank is the largest lender in India in terms of market value, which is over Rs 15.21 lakh crore on NSE. The stock is currently at Rs 1,985.90 apiece on July 3, 2025. However, 5 years ago, this stock was at Rs 1,073.95 on July 3, 2020. From July 3 of 2020 to 2025, HDFC Bank has given 84.92% returns.

Example: A Rs 1 lakh investment 5 years ago will now have a corpus of Rs 184,920, of which Rs 84,920 is the gains.

HDFC Bank Share Price Recommendation:

According to Trendlyne, the consensus recommendation from 41 analysts for HDFC Bank Ltd. is STRONG BUY. Of which, 29 analysts have suggested STRONG BUY and 8 have stated BUY. The average target price is Rs 2198.85 apiece, which signals a nearly 11% potential upside ahead.

In May, analysts at Geojit said, going forward, HDFC Bank is well-positioned to capitalize on improving liquidity conditions, robust capital foundation, vast network and enhanced technological capabilities to drive strong loan expansion. Moreover, favourable asset composition, improvement in borrowing mix and lower funding costs should continue to support margins over the coming years. Asset quality has remained steady, with the proportion of NPA not expected to increase significantly in the future. With an efficient operating model and a robust provisioning coverage underpinned by highquality assets, the bank is poised for sustained growth. Therefore, we reiterate our BUY rating on the stock, based on 2.6x FY27E BVPS, with a revised target price of Rs. 2,192.

FDs Vs Stocks: Which Is Better?

In general terms, if you prioritize safety and stability, FDs are a prudent choice, especially for beginners or retired people. On the other hand, if you're willing to accept higher risk in exchange for potentially higher returns and have a long investment horizon, the Stock Market could be more suitable, as per Mirae Asset-backed m.Stock website.

Comparison between FDs vs Stocks

Factors	Fixed Deposits	Stocks
Risk	Low	High
Returns	Predictable, lower	Variable, potentially higher
Investment Horizon	Short to medium-term	Long-term
Liquidity	Limited access with penalties for withdrawal	Generally liquid, but subject to market hours
Capital Appreciation	Limited	Potential for substantial growth
Diversification	Limited	High potential for diversification
Expertise Required	Minimal	Requires research and understanding
Taxation	Interest earned is taxable	Capital gains may be taxable
Emotional Impact	Less likely to evoke emotions	Can lead to emotional decisions
Suitable for	Risk-averse investors, short-term goals	Long-term investors, higher risk tolerance

(Image Source: m.Stock)

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.