Best Public Sector Bank FD Rates 2025: Who Gives the Highest Returns?

If you’re planning to invest safely in 2025, public sector bank FDs remain one of the most trusted options. They offer steady returns, government-backed security, and predictable income making them ideal for conservative investors. But the big question for this year is simple: Which PSU bank is giving the highest FD rates?

Why Public Sector Bank FDs Are Still a Top Pick in 2025

Public sector banks continue to attract FD investors because they combine higher credibility with decent interest rates, especially on special-tenure deposits.
You get:

Government ownership, which means higher trust
Insurance coverage up to ₹5 lakh
Smooth FD opening via branch, net banking, or mobile apps
Consistent returns regardless of market ups and downs

For anyone who prefers safety first, PSU FDs remain a dependable choice.

Highest-Returning PSU Bank FD Rates This Year

Several PSU banks are offering attractive special-tenure FDs. These “special rate” deposits usually fall between 300–1,000 days.

Here’s a quick look at some stand-out rates available in 2025 (general citizen rates):

Public Sector Bank	Highest FD Rate (2025)	Popular Special Tenure
Bank of Maharashtra	7.15%	366 days
Indian Overseas Bank (IOB)	7.10%	444 days
Punjab & Sind Bank	7.05%	444 days
Bank of India	7.00%	999 days (Green FD)
Central Bank of India	6.75%	Long specials like 2,222 or 3,333 days

Interest rates may vary slightly across regions, but the overall pattern remains similar nationwide.

How Banks Decide These FD Rates?

FD rates change depending on:

RBI policy decisions
Banking liquidity
Seasonal fund requirements
Competition among banks to attract deposits

Special-tenure FDs usually offer the highest return, since banks promote them to attract specific deposit sizes and durations.

Mistakes Investors Usually Make While Choosing FDs

A few common slip-ups can reduce your returns. Here are the easiest ones to avoid:

1. Picking Only by Interest Rate

The highest rate is tempting, but always match the tenure to your needs.
If you’ll need the money in 8 months, a 444-day deposit isn’t ideal.

2. Ignoring Tax

Interest on FDs is taxable as per your income slab.
Always compare post-tax returns.

3. Breaking FD Too Early

Premature withdrawal reduces your interest rate and attracts penalties.
Choose a tenure you can comfortably wait out.

4. Not Reviewing Rates

FD rates change. Checking before booking ensures you get the best deal available that day.

Best Ways to Maximize Your FD Returns in PSU Banks

Here are some simple tricks that genuinely make a difference:

Choose special-tenure FDs they offer the highest rates.
Ladder multiple FDs split your money across different tenures for better liquidity.
Use auto-renewal only if rates are stable otherwise renew manually.
Reinvest interest instead of taking payouts if you want maximum growth.
Senior citizens should always opt for additional rate benefit, usually +0.50%.

Recent Trends in PSU Bank FDs This Year

2025 is seeing a clear trend:
Banks are launching more special-tenure FDs with higher rates than traditional 1-year or 5-year deposits. Medium-term deposits between 360–450 days are giving the best returns right now.

Another trend is smoother, quicker digital FD opening through bank apps no more long branch visits unless you prefer them.

Conclusion

Public sector bank FDs continue to be one of the safest and most stable investment choices in 2025. If you’re looking for the highest PSU FD rates, banks like Bank of Maharashtra, IOB, and Punjab & Sind Bank currently stand out with special-tenure offers above 7%.

Choose a tenure that matches your financial goals, understand the tax impact, and avoid premature withdrawals. With the right choices, a PSU FD can be both safe and rewarding.

FAQs

When are PSU bank FD rates likely to change again?
Rates usually change after RBI policy reviews or when banks need to adjust liquidity, typically once every few months.

How can I get the highest FD rate in a PSU bank?
Look for special-tenure deposits like 366 days or 444 days these usually offer the top rates.

Why do some banks offer higher rates only for odd-day tenures?
Banks use special tenures to attract deposits for specific durations based on their internal fund planning.