PSU banks Vs Post office; Which offers better returns?

The government recently hiked the interest rates on small savings and post office time deposits. We compare the post office interest rates with public sector undertaking banks (PSU banks). Pertinently, both offer immense security as they are government owned.

How interest rate yields compare

Bank	Tenure	Interest rates
SBI	1 year -5 years	9.25%
PNB	1 year 1year -5 years	9.50% 9.25%-9.50%
BOB	1 year 1 year-5 years	9.25% 9.00%-9.25%
IDBI Bank	1 year 1 year-5years	9.25% 9.25%-9.50%

Post Office Schemes	Tenure	Interest rates
Time Deposits	1 year	7.70%
Time Deposits	1-5 years	7.70%- 8.50%

Service

In terms of service, PSU Banks can be considered far superior to services availed at Post Offices. Also, technology at Post Offices is yet not upgraded, leaving issues like online redemption.

Tax Exemption

In both the cases of Post office Time Deposits and Bank Deposits the interest income is taxed.

Conclusion

In all respects Bank deposits seems more favorable, on account of their superior returns and better service.

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