The Reserve Bank of India (RBI) has slashed the repo rate twice this year in February and April by a total 50 basis points (bps). This back-to-back rate cut resulted in all banks, including PSU lenders, lowering their term deposit rates. The high interest regime seems to be over as the central bank is expected to go for yet another cut in the June monetary policy review on the back of inflation softening.
So if you are thinking of investing in an FD scheme, this might be an opportune time for you before the RBI goes for yet another round of rate cut in June as that will see banks too softening term deposit rates further. According to experts, booking an FD now can be a wise decision. Once the interest rates go down, you have to compromise with low returns.
The good thing is that the interest rate on FD is locked — this means that if you book an FD at 7% today, you will continue to get the same interest for the next one, two or five years, even if the market rates go down. This is the reason why investing in FD at this time can prove to be beneficial especially for those with long-term plans.
Also read: Sweep-in FD can get you higher returns
In this write-up, we will take a look at the current fixed deposit rates offered to general customers and senior citizens by leading PSU banks in May after recent rate adjustments.
PSU banks have always been considered reliable — especially for senior citizens. Even in this environment of rate cuts, there are some PSU banks that are still giving interest ranging from 7.3% to 7.75% to senior citizens on 1 to 2-year tenors.
Here are two tables illustrating interest rates being offered to general customers and senior citizens:
| Bank FD interest rates (%) | ||||
| Bank | <1 year |
1 to 2 years |
2 to 3 years |
3 to 5 years |
| INDIAN: PUBLIC SECTOR BANKS | ||||
| Bank of Maharashtra | 6.9 | 7.25 | 6.5 | 6.5 |
| Bank of Baroda | 6.5 | 7.3 | 7.15 | 6.8 |
| Bank of India | 5.75 | 7.05 | 6.75 | 6.5 |
| Canara Bank | 6.25 | 7.25 | 7.2 | 7.2 |
| Central Bank of India | 6.25 | 7.3 | 7.15 | 6.75 |
| Indian Bank | 7.05 | 7.3 | 6.7 | 6.25 |
| Indian Overseas Bank | 5.75 | 7.3 | 6.8 | 6.5 |
| Punjab National Bank | 6.25 | 7.1 | 6.75 | 6.25 |
| Punjab & Sind Bank | 6 | 7.25 | 6.5 | 6.5 |
| State Bank of India | 6.5 | 7.05 | 6.9 | 6.75 |
| UCO Bank | 7.3 | 7.3 | 6.3 | 6.2 |
| Union Bank | 6.25 | 7.15 | 6.7 | 6.5 |
| Data as on respective banks’ website on 14 May 2025; For each year range, the maximum offered interest rate is considered; interest rate is for a normal fixed deposit amount below ₹1 crore. Compiled by BankBazaar.com. | ||||
| Public Sector Banks Highest Senior Citizens FD Interest Rates (%) | |
| Banks | 1-2 Years |
| Bank of Maharashtra | 7.75 |
| Bank of Baroda | 7.3 |
| Bank of India | 7.55 |
| Canara Bank | 7.35 |
| Central Bank of India | 7.35 |
| Indian Bank | 7.3 |
| Indian Overseas Bank | 7.4 |
| Punjab National Bank | 7.3 |
| Punjab & Sind Bank | 7.75 |
| State Bank of India | 7.3 |
| UCO Bank | 7.55 |
| Union Bank | 7.4 |
| Data as on respective banks’ website on 14 May 2025; The maximum offered interest rate is considered; interest rate is for a normal fixed deposit (callable) amount below ₹3 crore. Compiled by BankBazaar.com. | |
Also read: SBI special FD scheme returns: Know how much interest you can earn now
4 important things to keep in mind before investing:
Choose the FD period wisely – it may be beneficial to lock the current rate for a long period.
Check the bank’s rating and security – Public sector banks are safe, but still, confirmation of trust is important.
Check for special FD schemes for senior citizens – these can get you higher interest.
Keep auto-renewal on – so that your money does not lie idle after maturity but is put to use again.
Take advantage, before the rates fall further!
If interest rates fall again in the RBI meeting in June, then the rate that you like today may become a ‘dream of the past’ tomorrow. In such a situation, if you want fixed and safe returns, then it would be wise to invest at the current FD rates.