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SBI Fixed Deposits vs. Post Office Term Deposit Schemes

A number of top lenders, including SBI, have revised the interest rates they offer on fixed deposits. Read this article to find out how they compare against the rates offered on Post Office Term Deposit scheme.

SBI Fixed deposit vs post office term deposit schemes

Are fixed deposits your preferred investment choice? Then you may be aware that many banks have recently revised the interest rates on FDs following reports of surplus liquidity and a reduction in the repo rate by the Reserve Bank of India. The country’s largest lender, the State Bank of India (SBI), has been lowering its fixed deposit rates on select maturities. This move has prompted many individuals to consider other low-risk investment avenues, such as Post Office Time Deposits, which sees revision of rates every quarter. In this article, we will look at the difference between the two, and evaluate which would be the best instrument to park your money.

SBI Fixed Deposits

The latest interest rate revision on retail domestic term deposits was made by SBI on 10.10.2019. The rates applicable to deposits less than Rs. 2 crores are as under: (All figures in % per annum)

TenorsExisting for Public w.e.f.10.09.2019Revised For Public w.e.f.10.10.2019Existing for Senior Citizens w.e.f. 10.09.2019Revised for Senior Citizens w.e.f. 10.10.2019
7 days to 45 days4.504.505.005.00
46 days to 179 days5.505.506.006.00
180 days to 210 days5.805.806.306.30
211 days to less than 1 year5.805.806.306.30
1 year to less than 2 year6.506.407.006.90
2 years to less than 3 years6.256.256.756.75
3 years to less than 5 years6.256.256.756.75

Source: Official website of SBI

SBI now offers an interest rate of 6.40% to the general public and 6.90% to senior citizens on FDs of up to Rs. 2 crores over a lock-in period of 1 year to less than 2 years. The new interest rates shall be applied to fresh deposits and renewals of maturing deposits.

Post Office Time Deposit

The interest rate on Post Office Time Deposit is set by the government at the beginning of each quarter in a financial year. The interest rates as applicable from 01.07.2019 are as under:

1 yr. A/c6.9%
2 yr. A/c6.9%
3 yr. A/c6.9%
5 yr. A/c7.7 %

Source: Official website of India Post

The post office time deposit (POTD) facility by India Post is similar to that of fixed deposit accounts offered by banking institutions. As seen above, a time deposit account can be placed for any of the four tenures - 1, 2, 3, and 5 years.

SBI Fixed Deposits or Post Office Time Deposit: Where to Invest?

Here is a quick comparison of both instruments to help you make the right choice on where to park your money:

  • The interest rates offered to general customers of SBI Fixed Deposits range from 4.50% to 6.70%, while the rates on Post Office Time Deposit are 6.9% and 7.7%.

  • The tenure on SBI FD accounts varies from 7 days to 10 years. Individuals can therefore choose whether they would like to invest for a short term or a long term. Under Post Office Term Deposit schemes, however, users can only pick from tenure options - 1 year, 2 years, 3 years or 5 years.

  • The interest on Post Office Term Deposits are revised and set by the government on a quarterly basis. Fixed deposit rates by SBI and other banks get impacted when the Reserve Bank of India changes its repo rate.


Although bank FDs and Post Office Time Deposits are similar in the manner that they function, their features are quite different. It is thus necessary to evaluate one’s goals and match them with the product specifications. When it comes to Post Office Term Deposits, individuals can expect to see interest rates being revised every quarter. In case of banking institutions, there is no telling when they can change their rates.

The advantage that bank FDs have over Post Office Term Deposit is the flexibility on investment tenure. Individuals can stay invested for up to 10 years, whereas Post Office Term Deposits allow customers to park their money for up to 5 years. It is important to note, however, that post the maturity, individuals can choose to renew their deposits (here, new interest rates will be applicable).

Recommended Read: Post Office Scheme Offers Better Interest Than Fixed Deposits