Top 10 Public Sector Banks Offering Highest FD Interest Rates in 2025: Compare Before You Invest

If you're planning to invest in a Fixed Deposit (FD), comparing interest rates across public sector banks is essential to maximize your returns. In 2025, several government banks are offering highly competitive FD interest rates, ranging from 6.10% to as high as 7%. This guide provides a detailed comparison of the top 10 public sector banks and their current FD rates across different tenures, helping you make a more informed investment decision.

✅ Why Compare FD Interest Rates Before Investing?

FDs are one of the safest investment options, especially for conservative investors looking for steady returns. However, the interest rates vary significantly among banks and across tenures. Even a 0.5% difference can significantly impact your returns over the long term. Let’s look at the current interest rates of leading public sector banks in India as of July 2025.

🔟 Top 10 Government Banks Offering the Best FD Interest Rates 1️⃣ Central Bank of India

• Highest Interest Rate: 7%

• Interest Range: 6.50% – 7% for tenures between 1 to 5 years

• Highlight: Offers the highest interest among all public sector banks, making it a top choice for investors.

2️⃣ Indian Bank

• Minimum Rate (1 year FD): 6.10%

• Maximum Rate: 6.90%

• Insight: Slightly lower on long-term FDs, but still offers decent returns.

3️⃣ Indian Overseas Bank

• 1-Year Rate: 6.60%

• Maximum Rate: 6.75%

• 5-Year Rate: 6.30%

• Remark: A balanced option with strong mid- and long-term FD returns.

4️⃣ Canara Bank

• Flat Rate: 6.50% across all tenures

• Suitability: Great for those who prefer stable and predictable returns.

5️⃣ Punjab National Bank (PNB)

• 1-Year Rate: 6.40%

• Maximum Rate: 6.70%

• 5-Year Rate: Up to 6.50%

• Note: Competitive across all durations with steady returns.

6️⃣ Bank of India

• 1-Year Rate: 6.50%

• Maximum Rate: 6.70%

• 5-Year Rate: 6.00%

• Tip: Ideal for mid-term investments.

7️⃣ Bank of Baroda

• Maximum Rate: 6.60%

• 5-Year Rate: 6.40%

• Comment: Balanced FD scheme with decent returns across tenures.

8️⃣ UCO Bank

• 1-Year Rate: 6.25%

• Maximum Rate: 6.70%

• 5-Year Rate: 6.10%

• Advice: Offers competitive short-term interest but slightly lower for longer tenures.

9️⃣ State Bank of India (SBI)

• 1-Year Rate: 6.25%

• Maximum Rate: 6.60%

• 5-Year Rate: 6.05%

• Observation: Reliable and secure, but lower returns compared to other banks.

🔟 Union Bank of India

• 1-Year & 3-Year Rate: 6.60%

• 5-Year Rate: 6.25%

• Review: Consistent performer offering balanced interest across terms.

📊 Summary Comparison Table Bank Name 1-Year FD Rate Max FD Rate 5-Year FD Rate

Central Bank of India	6.50%+	7.00%	6.50%+
Indian Bank	6.10%	6.90%	Lower
Indian Overseas Bank	6.60%	6.75%	6.30%
Canara Bank	6.50%	6.50%	6.50%
PNB	6.40%	6.70%	6.50%
Bank of India	6.50%	6.70%	6.00%
Bank of Baroda	6.60%	6.60%	6.40%
UCO Bank	6.25%	6.70%	6.10%
SBI	6.25%	6.60%	6.05%
Union Bank of India	6.60%	6.60%	6.25%

📌 Final Thoughts: Which FD is Right for You?

• High Return Seeker: Go with Central Bank of India or Bank of Baroda

• Short-Term Investment: Consider Indian Overseas Bank or Union Bank

• Stable Returns with Trust: Canara Bank and PNB are great choices

• Looking for Safety + Digital Ease: SBI remains a popular choice despite slightly lower returns

✅ Key Tips Before You Invest in FD:

• Always compare interest rates for your preferred tenure.

• Senior citizens often get additional interest (usually +0.50%).

• Consider premature withdrawal penalties and compounding frequency.

• Use trusted platforms like your bank or reliable aggregators like PaisaBazaar for FD bookings.

Disclaimer: The interest rates mentioned above are as per the latest data available in July 2025. Rates are subject to change based on bank policies. Always check official bank websites or trusted financial platforms before investing.