5 Government Banks That offer Highest Interest Rates On Fixed Deposits Upto 8.5%

The Reserve Bank of India over the last few quarters has hiked interest rates. Several banks have accordingly increased their fixed deposit interest rates. Here are 5 government banks that have hiked their interest rates recently.

Best interest rates from government banks

State Bank of India Fixed Deposits

SBI has hiked its interest rates and the 400 days bucket now comes with the best interest rate of 7.10% for the general public and 7.60% for senior citizens. The other tenures come with lower interest rates.

Punjab and Sind Bank fixed deposits

This bank offers probably the best interest rate on fixed deposits as it were from a government bank. On a tenure of 221 days the bank offers an interest rate of 8% for regular deposits and 8.50% for senior citizens. The only problem here is that the tenure is too short and should interest rates fall, investors should have a problem as they have not locked money for a higher tenure.

Central Bank of India

This bank too offers a very attractive interest rate of 7.85% for senior citizens on the 444 days bucket and 7.35% for regular depositors. Since this too is a government owned entity the deposits are safe.

Canara Bank

Canara Bank offers a lower interest rate on Fds when compared to some government peers like Punjab and Sind Bank. The best fixed deposit rates here are for a 400-day tenure, where the interest rate offered is 7.15% for regular deposits and 7.65% for senior citizens.

Indian Bank

Indian Bank offers a maximum interest rate of 7.50% for senior citizens and 7% for regular deposits.

It is better to go for a larger time frame of deposits and avoid short term tenures. Interest rates could have peaked and going forward we might see a fall in interest rates. It is therefore prudent to lock money for longer term tenures. Private sector banks have also hiked their deposit rates lately and are offering interest rates that are in line with government banks. The good thing about deposits ate HDFC Bank, a private sector bank is that longer term tenures can also fetch very good interest. In many banks that is not the case and the longer term tenures have a lower interest rates. Ideally, one should look for fixed deposits with a tenure of 3-5 years. Overall, it is highly possible that going forward by the end of the year or early next year, the RBI would once again start cutting interest rates.