Even though the stock market and mutual funds are becoming more popular, many people still prefer fixed deposits (FDs) for safe and guaranteed returns.
The biggest advantage of FDs is that there is no risk of losing money, and investors do not have to worry about market ups and downs. For those who want stability and predictable income, fixed deposits remain a trusted option.
Currently, several banks are offering attractive interest rates on 3-year fixed deposits. Both public sector
and private banks have competitive rates, making it important for investors to compare options before investing. Let’s understand how public and private banks differ and which option may suit you best.
Contents
Interest Rates Offered by Public Sector Banks
Public sector banks are known for their safety and reliability, which is why many investors prefer them for fixed deposits. At present, major public sector banks are offering similar interest rates on 3-year FDs.
State Bank of India (SBI) and Punjab National Bank (PNB) are offering interest rates of around 6.30% per annum.
Bank of India and Bank of Baroda (BoB) are offering interest rates of up to 6.25% per annum.
These rates may not be the highest in the market, but they provide strong security and stability. For risk-averse investors, public sector banks can be an excellent choice for long-term savings.
Interest Rates Offered by Private Banks
Private sector banks usually offer slightly higher interest rates compared to public sector banks to attract more customers.
For a 3-year fixed deposit, major private banks like HDFC Bank and ICICI Bank are offering interest rates ranging from 6.50% to 7.00% per annum.
Typically, private banks provide interest rates that are about 0.25% to 0.50% higher than public sector banks. This difference may seem small, but over a 3-year period, it can lead to noticeably higher returns.
Therefore, investors who are willing to accept slightly higher risk in exchange for better returns often consider private banks.
Detailed Comparison of Major Banks
State Bank of India (SBI)
SBI, the largest bank in India, offers an interest rate of around 6.30% on 3-year fixed deposits. If you invest ₹1 lakh, you can earn more than ₹20,000 in interest after three years.
SBI is considered one of the safest options for FD investments, making it ideal for conservative investors who prioritize security over higher returns.
Punjab National Bank (PNB)
PNB also offers an interest rate of around 6.30% on 3-year fixed deposits, similar to SBI. With an investment of ₹1 lakh, you can earn approximately ₹20,000 in interest over three years.
If you already have an account with PNB, opening a 3-year FD can be a convenient and secure investment option.
Bank of Baroda (BoB)
Bank of Baroda provides an interest rate of around 6.25% on 3-year fixed deposits. Although this rate is slightly lower than SBI and PNB by just 0.05%, it still offers competitive returns.
On an investment of ₹1 lakh, you can earn about ₹19,900 in interest over three years. BoB is a good option for investors who prefer a stable public sector bank with reliable services.
HDFC Bank and ICICI Bank
HDFC Bank and ICICI Bank, two leading private sector banks, offer interest rates ranging from 6.50% to 7.00% on 3-year fixed deposits.
At an interest rate of 7%, an investment of ₹1 lakh can generate a profit of more than ₹21,000 over three years. These banks are often preferred by investors who want higher returns along with modern banking services and flexibility.
Public vs Private Banks: Key Differences
When choosing between public and private banks for fixed deposits, investors should consider both safety and returns:
Safety: Public sector banks are generally considered safer because they are backed by the government.
Returns: Private banks usually offer higher interest rates, leading to better returns over time.
Risk Level: Public banks have lower risk, while private banks carry slightly higher risk but better profit potential.
Convenience and Services: Private banks often provide faster services and more flexible schemes.
Understanding these differences can help you make a more informed investment decision.
Where Should You Invest?
If your main priority is safety and stability, investing in public sector banks like SBI or PNB can be a wise choice. These banks offer secure returns and are suitable for conservative investors.
However, if you want to earn an additional ₹1,000 to ₹2,000 in returns over three years, you can explore fixed deposit schemes offered by private banks like HDFC Bank or ICICI Bank. Their higher interest rates can help you maximize your profits.
Before investing, it is important to check the latest interest rates with your bank, as rates may change from time to time. Also, consider factors like your financial goals, risk tolerance, and investment horizon.