SBI vs PNB vs BoB vs Canara Bank FD Rates: Which PSU Bank Pays the Most This Month

According to reporting by News9live, several major public sector banks — State Bank of India, Punjab National Bank, Bank of Baroda and Canara Bank — are once again being compared this month on which one pays the highest interest on fixed deposits. For savers, the detail that matters isn't which single bank "wins," but that FD rates among large public sector banks (PSBs) tend to sit within a narrow band, and the right choice depends on your tenure, your tax bracket, and whether you are a senior citizen.

If you are choosing a bank purely to chase the top FD rate this month, the gain over a bank paying slightly less is usually small in absolute rupee terms unless you are depositing a large sum for several years. What matters more for most savers is matching the tenure to your goal, checking deposit insurance limits, and comparing post-tax returns rather than the headline rate alone.

This article explains how these banks set their FD rates, works through the arithmetic of what a small rate difference actually means on a real deposit, and lays out a practical checklist for choosing between PSU bank FDs this month.

Key takeaways

• SBI, PNB, Bank of Baroda and Canara Bank are being compared this month on fixed deposit returns, as reported by News9live.
• PSU bank FD rates typically move within a tight band of each other because they compete for the same low-risk depositor base.
• A 0.25–0.50 percentage point difference in FD rate matters more on large sums and longer tenures than on small, short-term deposits.
• Senior citizens generally get an additional premium, commonly around 0.50% over the card rate, at most public sector banks.
• Deposit insurance from DICGC covers only up to ₹5 lakh per depositor per bank, which should factor into how you split large deposits.
• The "highest rate" bank this month may not remain the highest next quarter, so tenure fit and liquidity needs matter as much as the headline number.

How public sector bank FD rates are set and why they differ

Public sector banks price fixed deposits based on their marginal cost of funds, their liquidity position, and the interest rate environment set by RBI monetary policy. When banks need deposits to fund credit growth, they raise FD rates to attract savers; when they are flush with liquidity, they hold or trim rates. Because SBI, PNB, Bank of Baroda and Canara Bank all operate in the same regulatory environment and largely serve the same retail and semi-urban depositor base, their card rates for comparable tenures tend to move in the same direction, even if one bank is briefly ahead by a fraction of a percentage point.

This is also why "which bank offers the highest FD rate" answers change frequently — a bank may lead in the 1-year bucket this month and lag in the 3-year bucket, or another bank may run a limited-period special rate on a specific tenure to shore up deposits. Comparisons like the one reported by News9live are useful as a snapshot, but the ranking is not static.

What changes for savers comparing these banks

For a saver deciding where to park money this month, the practical differences between these four PSU banks usually come down to:

• The card rate for your specific tenure (rates differ by bucket — 7 days to 10 years — not as a single flat number).
• Whether you qualify for the senior citizen or super senior citizen premium.
• Minimum deposit amount and premature withdrawal penalty terms, which vary slightly by bank.
• Ease of account opening and servicing — net banking, branch density, and existing relationship with the bank.
• Whether the bank is currently running a special-tenure rate that beats its own standard card rate.

None of these differences are usually large enough to justify moving your entire relationship to a new bank purely for a marginally higher FD rate, unless the gap is meaningful and sustained across the tenure you actually need.

Worked example: what a rate difference really means in rupees

To see why FD rate comparisons matter less than headlines suggest, take a hypothetical comparison (illustrative only, not the actual current rates of these banks): a ₹5 lakh deposit for one year at 6.5% versus the same deposit at 7.0% at a different bank.

Scenario	Rate (illustrative)	Interest on ₹5,00,000 for 1 year	Difference
Bank paying lower rate	6.5%	₹32,500 (before tax)	—
Bank paying higher rate	7.0%	₹35,000 (before tax)	+₹2,500

A 0.5 percentage point gap on a one-year, ₹5 lakh deposit works out to roughly ₹2,500 before tax — and less after TDS and your income tax slab are applied. Extend the same illustrative gap to a 5-year tenure and the picture changes: on a ₹5 lakh cumulative FD held for five years, a 0.5 percentage point higher rate can compound to a noticeably larger gap than the one-year example, potentially ₹15,000–₹20,000 more over the full tenure. This is why the "which bank pays more" question matters most for long-tenure, large-sum deposits, and least for short-term, small-sum ones.

For readers weighing whether to lock savings into an FD versus using that capital elsewhere, the FD rate is one input, not the whole decision — it's worth comparing it against current interest rate tables and running the numbers on an EMI calculator if you're also carrying loan debt.

Who benefits and who should look elsewhere

Savers who benefit most from carefully comparing PSU bank FD rates are those parking large lump sums — a retirement corpus, sale proceeds, or a bonus payout — for a fixed period where even a small rate edge compounds meaningfully. Senior citizens also have more to gain from comparison shopping, since the additional premium is where PSU banks most often differentiate themselves.

Savers who should not overweight the "highest rate this month" headline include:

• Those depositing small sums (under ₹1–2 lakh), where the rupee difference is negligible.
• Those who need liquidity soon and would face a premature withdrawal penalty if they chase a marginally better rate at an unfamiliar bank.
• Borrowers who are simultaneously carrying high-cost debt — for them, prepaying a personal loan or credit card usually beats the after-tax FD return by a wide margin. It's worth checking your loan interest rate against the FD rate before deciding to save rather than repay.

What to do before booking a fixed deposit this month

1. Check the card rate for your exact tenure at each bank you're considering — not just the "headline" best rate, which is often for a specific special tenure only.
2. Confirm whether you qualify for the senior citizen premium and whether it applies to the tenure you want.
3. Calculate the post-tax return: FD interest is fully taxable at your slab rate, and TDS applies once interest crosses the prescribed threshold in a financial year.
4. Check the premature withdrawal penalty terms in case you need to break the FD early.
5. If depositing a large sum, consider splitting it across banks so each bank's exposure stays within the ₹5 lakh DICGC insurance limit per depositor per bank.
6. Compare the FD rate against your other financial obligations — sometimes prepaying a loan is the better use of the same money; check your options against an EMI calculator.

Common mistakes savers make when chasing the highest FD rate

• Comparing only the headline rate without checking which tenure bucket it actually applies to.
• Ignoring taxation — a higher pre-tax rate at one bank can end up lower post-tax than a slightly lower rate elsewhere if TDS handling differs.
• Locking a large sum into a long tenure right when rates may be near a cyclical high, without checking current rate tables first.
• Overlooking premature withdrawal costs when future liquidity needs are uncertain.
• Depositing more than ₹5 lakh in a single bank without considering deposit insurance coverage limits.

Outlook: where FD rates may head next

FD rates at large PSU banks generally track the broader interest rate cycle set by RBI monetary policy and system-wide liquidity conditions. Whichever of SBI, PNB, Bank of Baroda or Canara Bank is "highest" this month is a snapshot, not a fixed position — banks revise card rates periodically, and a bank lagging today can lead next quarter by adjusting a specific tenure bucket. Savers with flexible timing may benefit from tracking rate tables over a few weeks rather than acting on a single day's comparison. Check BankCreds' news section for ongoing coverage of rate changes as they're reported.

Frequently asked questions

Which PSU bank currently offers the highest FD rate?

This changes frequently and varies by tenure — a bank leading in the 1-year bucket may not lead in the 3-year or 5-year bucket. Check each bank's current published rate card for the specific tenure you want rather than relying on a single headline ranking.

Is my fixed deposit safe if the bank fails?

Deposits at all these banks are insured by DICGC up to ₹5 lakh per depositor per bank, covering both principal and interest. If you're depositing more than that in one bank, consider splitting the amount across banks to stay within the insured limit.

Do senior citizens get a better FD rate at these banks?

Most public sector banks offer an additional interest premium — commonly around 0.50% over the standard card rate — for senior citizens, and sometimes a further increment for super senior citizens. This premium often matters more than differences in the base rate between banks.

Is FD interest taxable?

Yes. Interest earned on fixed deposits is fully taxable as income at your applicable slab rate, and banks deduct TDS once your interest income crosses the prescribed threshold in a financial year, unless you submit Form 15G/15H where eligible.

Should I break an existing FD to move to a bank offering a higher rate now?

Usually not, unless the rate gap is large and sustained, because premature withdrawal typically comes with a penalty (often around 0.50–1% reduction in the applicable rate) that can offset the benefit of moving. Compare the penalty cost against the gain before switching.