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Best PSU Bank Special FD Rates 2026: These 11 Government Banks Offer Returns Up to 6.85%

Siddhi Jain | June 26, 2026 9:15 AM CST

Looking for Safe Investment Options? Compare the Latest Special Fixed Deposit Schemes Offered by Public Sector Banks

PSU Bank Special FD Rates 2026: Fixed Deposits (FDs) continue to be one of the most trusted investment options for people looking for stable returns without taking market-related risks. For conservative investors, public sector banks remain a preferred choice because they combine capital safety with guaranteed interest earnings.

Several government-owned banks have recently revised the interest rates on their Special Fixed Deposit (FD) schemes. These limited-period deposits offer slightly higher returns than regular FDs, making them an attractive option for investors who can lock in their money for a fixed tenure.

If you are planning to invest in a Special FD, comparing the latest interest rates, deposit periods, and withdrawal conditions can help you maximize your returns.

Which PSU Banks Are Offering the Highest Interest Rates?

Among public sector banks, Bank of India and Punjab & Sind Bank currently offer the highest interest rate of 6.85% per annum on their special fixed deposit schemes for general customers.

They are followed by Indian Bank, Bank of Baroda, and several other leading PSU banks offering competitive returns on deposits with specific maturity periods.

Latest PSU Bank Special FD Interest Rates

Public Sector Bank	Maximum Interest Rate	Special FD Tenure
Bank of India	6.85%	999 Days
Punjab & Sind Bank	6.85%	666 Days
Indian Bank	6.80%	555 Days
Bank of Baroda	6.75%	555 Days (BoB Golden Goal Deposit Scheme)
Central Bank of India	6.70%	444 Days
Bank of Maharashtra	6.65%	400 Days
Union Bank of India	6.65%	555 Days
Canara Bank	6.60%	555 Days
Indian Overseas Bank	6.60%	444 Days
Punjab National Bank	6.60%	444 Days
State Bank of India	6.45%	444 Days (Amrit Vrishti Scheme)

Note: The above interest rates are applicable as available up to June 24, 2026 and may be revised by individual banks from time to time.

Things to Consider Before Investing in a Special FD

Choosing a fixed deposit should involve more than simply selecting the highest interest rate. Investors should carefully evaluate several important factors before making a decision.

Check the Deposit Tenure

Every Special FD scheme comes with a predetermined investment period. Ensure that the tenure matches your financial goals because these schemes generally offer the best returns only if the deposit is held until maturity.

Understand Premature Withdrawal Rules

Many banks impose penalties if you withdraw your money before the maturity date. Read the premature withdrawal terms carefully to avoid unexpected reductions in your returns.

Senior Citizen Benefits

Most public sector banks provide additional interest rates for senior citizens. If you qualify, this extra return can significantly improve the overall earnings from your investment.

Know the TDS Rules

Interest earned on fixed deposits may attract Tax Deducted at Source (TDS) if it exceeds the prescribed threshold under income tax regulations. Investors should understand the applicable tax rules before investing.

Who Should Consider a Special Fixed Deposit?

Special FD schemes are particularly suitable for investors seeking stable and predictable returns without exposing their savings to market volatility.

These schemes may be ideal for:

Individuals looking for secure investment options with guaranteed returns.
Retirees who rely on fixed income and prefer low-risk financial products.
Investors who wish to avoid fluctuations associated with equity markets.
People who can keep their funds invested for the entire tenure in exchange for higher interest than standard fixed deposits.

Are Special FDs Better Than Regular Fixed Deposits?

For investors who do not require immediate access to their money, Special FDs can offer better returns than conventional fixed deposits. Since these schemes usually provide higher interest rates for specific tenures, they can help maximize earnings while maintaining the safety associated with bank deposits.

However, before investing, compare not only the interest rates but also the maturity period, liquidity, premature withdrawal charges, tax implications, and senior citizen benefits. A well-informed decision can help you choose the deposit that best matches your financial objectives.

Disclaimer: This article is intended solely for informational purposes and should not be treated as financial or investment advice. Interest rates are subject to change at the discretion of individual banks. Investors should verify the latest rates with their respective banks and consult a qualified financial advisor before making investment decisions.