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In the current economic environment, amidst the fluctuations and uncertainties of the stock market, Fixed Deposit (FD) still remains the first choice of the Indian middle class and common investors for safe investment. When it comes to keeping the hard-earned money safe and getting assured returns on it, the countrymen have maximum trust in public sector banks. If you are also planning to deposit ₹ 1 lakh of your savings in a government bank for a period of 1 year (12 months), then it is very important for you to know which government bank is giving you the highest interest and better returns.
Often people get FD in any nearby bank without doing any research, due to which they have to suffer direct loss in annual interest. Today we will understand in simple language the latest interest rates available on 1 year FD in 8 largest and trusted government banks of the country and the complete mathematics of total maturity amount available on investment of ₹ 1 lakh so that you can make the right choice of your money.
On making fixed deposits for a period of 1 year in the country’s largest government bank, State Bank of India, the common citizens are being given annual interest at the rate of 6.80%. If you start an FD of ₹1 lakh in SBI for one year, you will earn an additional around ₹6,975 in interest only at the time of maturity. In this way, after one year your total maturity amount will increase to ₹ 1,06,975.
If we talk about senior citizens, then SBI gives returns to the elderly at the rate of 0.50% additional interest i.e. 7.30%. Senior citizens get a net interest of around ₹7,500 in 1 year on an investment of ₹1 lakh, making their total return ₹1,07,500.
On making 1 year FD in Punjab National Bank (PNB), the country’s second largest government bank, an annual interest of 6.75% is given to the common customers. By depositing ₹ 1 lakh in PNB, interest of about ₹ 6,920 is received after 1 year and the total amount becomes ₹ 1,06,920. For senior citizens, this rate is 7.25%, at which the return of ₹1 lakh is ₹1,07,250.
On the other hand, Bank of Baroda is offering its customers an attractive interest rate of 6.85% on 1 year fixed deposit. On investment of ₹ 1 lakh in Bank of Baroda, a common citizen gets an interest of about ₹ 7,025 in 1 year and a senior citizen gets an interest of about ₹ 7,550 at 7.35% interest rate.
Canara Bank is giving 6.85% interest to its account holders on FD with a tenure of 1 year, which is exactly the same as Bank of Baroda. In this also, by depositing ₹ 1 lakh, a common investor gets a total amount of ₹ 1,07,025 after 1 year.
In Union Bank of India, interest is being given on 1 year fixed deposit at the rate of 6.75%, due to which the amount of ₹ 1 lakh increases to ₹ 1,06,920 after 1 year. Talking about Bank of India, this bank is offering 6.80% interest rate to its general customers on 1 year FD, under which interest of ₹ 6,975 is earned on investment of ₹ 1 lakh.
If you fix an FD of ₹ 1 lakh for 1 year in Indian Bank, which has a strong network in South India, you will get interest at the rate of 6.70%. According to this, your total amount in 1 year will be ₹ 1,06,870, of which ₹ 6,870 will be only interest.
Central Bank of India is giving an annual interest rate of 6.75% to its customers on 1 year FD. By depositing ₹1 lakh in this bank, you will get ₹1,06,920 as maturity after 1 year. Senior citizens are given additional interest benefits ranging from 0.50% to 0.65% compared to the normal rates in all these banks.
Before depositing your hard-earned money as fixed deposit in any government bank, it is very beneficial to understand some important rules. The interest received on FD is compounded on quarterly compounding basis, due to which the maturity amount becomes slightly higher than simple interest.
Additionally, if your total FD interest in 1 year exceeds ₹40,000 (₹50,000 for senior citizens), banks deduct TDS on it as per the rules. If your total annual income is below the tax slab, you can avoid deducting TDS by submitting Form 15G or Form 15H in the bank. Choose an FD period of 1 year keeping in mind your needs and emergency fund so that you can avoid penalty for prematurely breaking the FD.