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FD Interest Rates 2026: Avoiding Stock Market Risks? This Government Bank Is Offering High Returns on Short-Term FDs

Posted on 29th May 2026 12:10 pm by rohit kumar

For investors seeking stable and risk-free returns amid ongoing market uncertainty, Fixed Deposits (FDs) offered by public sector banks have once again become a preferred investment option. Several government-owned banks are currently offering attractive interest rates on special-tenure FD schemes, making this an ideal opportunity for conservative investors looking to grow their savings safely.

 

If you are planning to invest your money for a period ranging from one to three years, these special FD schemes from PSU banks could help you secure higher returns without exposing your capital to stock market fluctuations.

 

Public Sector Banks Offering Attractive FD Interest Rates

 

According to the latest banking data, public sector banks are engaged in intense competition to attract depositors by offering higher FD interest rates on limited-period schemes.

 

Among the major lenders:

 

Bank of Baroda is offering 6.45% interest on its 444-day ‘BoB Square Drive Deposit Scheme.’

State Bank of India is also providing 6.45% returns under its special 444-day ‘Amrit Vrishti’ FD scheme.

Canara Bank, Indian Bank, Indian Overseas Bank, Punjab National Bank, and Union Bank of India are currently offering up to 6.60% interest on special tenures ranging between 444 and 555 days.

 

However, a few banks are standing out by offering even higher returns.

 

Top 5 Government Banks Offering the Highest FD Interest Rates in 2026

1. Punjab & Sind Bank

 

Punjab & Sind Bank is currently offering one of the highest FD returns among PSU banks:

 

6.75% interest

Special tenure: 666 days

2. Bank of India

 

Investors seeking longer tenure options can consider:

 

6.70% interest

Tenure: 3 years

3. Central Bank of India

 

Ideal for short-term investors:

 

6.65% interest

Tenure: 333 days

4. Bank of Maharashtra

 

The bank is offering:

 

6.65% returns

Special tenure: 400 days

5. Canara Bank, Punjab National Bank & Union Bank of India

 

These banks are jointly offering:

 

6.60% interest

Tenures between 444 and 555 days

Why Are Investors Turning Towards Fixed Deposits?

 

With equity markets witnessing frequent ups and downs, many investors are prioritizing capital protection over aggressive returns. Financial experts believe that FDs offered by public sector banks provide two major advantages:

 

Guaranteed Returns

 

Unlike stock market investments, FD returns remain fixed throughout the investment period, offering predictability and financial stability.

 

High Safety of Capital

 

Public sector banks are backed by the Government of India, making them one of the safest places for parking surplus funds. This significantly reduces the risk of capital loss.

 

Who Should Invest in These FD Schemes?

 

These special FD schemes are particularly suitable for:

 

Senior citizens seeking a steady income

Salaried individuals with surplus savings

Conservative investors avoiding market risk

Short-term investors looking for stable returns

 

Experts suggest that investors compare tenure, interest rates, liquidity options, and premature withdrawal penalties before making a final decision.

 

Is This the Right Time to Invest in FDs?

 

With interest rates currently elevated and uncertainty persisting in global financial markets, many analysts believe this could be a favorable period to lock funds into higher-yield FD schemes before banks revise rates downward in the future.

 

For risk-averse investors looking to preserve wealth while earning stable returns, government bank FDs remain one of the safest investment options available in 2026.

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