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Top 10 Public Sector Banks With Highest Interest Rates On Recurring Deposit

So you have decided that you want to go with a Recurring Deposit as a means to saving and earning a fixed interest and you have decided to play it safe by looking for a public sector bank to invest in. In this blog post, we will not only list the top 10 public sector banks offering the top interest rates on RDs, but we will also guide you on exactly how RDs work, top considerations and a little insight into how to spot truly low–risk public sector banks . 

List of Top 10 Public Sector Banks That Offer Highest Interest Rates On Recurring Deposit

1. State Bank of India – 4.40% to 5.40% and 4.90% to 6.20% for senior citizens

2. Bank of Baroda – 4.30% to 5.25% and 4.80% to 6.25% 16.11.2020 for senior citizens

3. Union Bank of India – 4.40% to 5.50% and 4.90% to 6.00% for senior citizens

4. Canara Bank – 4.40% to 5.25% and 4.90% to 5.75% for senior citizens

5. Punjab National Bank – 4.40% to 5.25% and 4.90% to 5.75% for senior citizens 

6. Indian Bank – 4.00% to 5.25% and 4.50% to 5.75% for senior citizens 

7. Indian Overseas Bank – 4.90% to 5.20% and 5.40% to 5.70% for senior citizens

8. Bank of India – 4.35% to 5.05% and 4.85% to 5.55%  for senior citizens

9. Punjab & Sind Bank – 4.45% to 5.30% and 4.95% to 5.50%  for senior citizens

10. Central Bank of India – 4.25% to 5.00% and 4.75% to 5.50%  for senior citizens

You are doing the right thing by researching RD interest rates. After all, the whole idea of a recurring deposit – or any investment – is to grow one’s savings and as such, it makes sense to choose the bank that offers you the best rate of interest.

Why people choose Public Sector Banks for deposits

You have probably elected to go with a public sector bank because of the level of capital safety associated with public sector banks. The idea is that since these banks are an extension of the central government, should they land in any trouble, the RBI is likely to step in and enable a merger with some other bank. 

Even for listed public sector banks that go belly up, depositors money is most often returned even if equity shares are written off and shareholders fail to receive their money. 

Why people choose recurring deposits 

A recurring deposit is like a fixed deposit in the sense that you agree to put in a certain amount of money for a certain amount of time in return for a predetermined rate of interest and your capital returned by the predetermined date.

Recurring deposits however, do not require you to put in the entire amount upfront. You can do so in regular installments. You need not wait till you collect Rs 10,000 or to meet the minimum investment amount for a fixed deposit. 

A recurring deposit does not charge you penalties if you are unable to pay a certain installment and also pays you a portion of your interest if you need to withdraw your investment prematurely (provided you have at least retained the investment for a period of 30 days). 

Factors to consider when investing in recurring deposits

  • You are already considering the most important factor – interest rates – since you clicked on an article about the top interest rates.

    However, if risk is not a factor, you might also want to compare not just public sector RD interest rates, but private sector ones as well. For instance you might want to hold up  SBI’s RD interest rates  against HDFC’s RD interest rates and Axis Bank’s RD interest rates.

  • You should also consider fees and charges. Public sector banks tend to have lower fees and charges. Perhaps HDFC’s recurring interest rates are a winner by far, but a public sector bank might still be able to win the race – in terms of overall earnings delivered – because of lower fees and charges.

    Public sector banks are, in fact, known to offer lower fees and charges. 

  • If you are saving towards a time bound financial goal and are counting on your fixed income to meet a certain capital requirement, do not forget to account for interest deductions. TDS of 10% will be shaved off your interest amount if your annual income exceeds over Rs 5 lakh; more for higher tax slabs.

  • If you are investing in recurring deposits as a wealth generation strategy and if you have sufficient capital, a steady income and a decent risk appetite you could consider diversifying your portfolio and adding other types of investments, to access higher interest rates.



Recurring deposits can give people with low monthly savings a useful opportunity to save and earn interest. For investors concerned about banks going belly up, there is an implied safety, that they find comforting, with public sector banks because they are seen as an extension of the government and thereby represent low risk of defaulting on paying depositors. 

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