Don’t Delay Your FD Investment – RBI Rate Cut May Lead to Lower Interest Rates Soon
RBI Cuts Repo Rate to 5.5% – Big Impact on FD Interest Rates
The Reserve Bank of India (RBI) has cut the repo rate for the third time this year, bringing it down to 5.5% after a fresh 50 basis points (bps) reduction. Earlier, RBI had reduced the rate by 25 bps each in February and April 2025.
This continuous rate cut is directly impacting Fixed Deposit (FD) and Savings Account interest rates, which are falling sharply. If you’re planning to invest in FD, now is the time – before rates drop further.
What Was Announced in the RBI Meeting?
On Friday, June 6, the RBI made several key announcements in its monetary policy review:
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Repo rate reduced by 50 bps to 5.5%
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Cash Reserve Ratio (CRR) cut by 1%
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Policy stance shifted from "Accommodative" to "Neutral"
Due to this, the cost of funds for banks is decreasing, prompting them to lower interest rates on FDs and savings accounts.
According to SBI Research, FD interest rates have already dropped by 30 to 70 basis points since February 2025. In some cases, savings account interest rates have gone as low as 2.70%.
Will Interest Rates Drop Further?
Yes. SBI Research suggests that the RBI might cut the repo rate by another 100 bps in FY26 if inflation stays below 4% and credit growth remains slow. This means interest rates on FDs and savings accounts could fall even more in the coming months.
What Should FD Investors Do Now?
If you're planning to invest in FDs, this could be the right time. Interest rates are currently between 7% to 8.25% in some small finance banks – but they may not last long.
Tip: While smaller banks offer higher rates, they carry slightly higher risk. So, keep your deposit amount within the ₹5 lakh insurance limit (DICGC).
Best option: Consider locking your money into 2 to 5-year FDs now to secure higher returns before rates drop further.
Latest FD Interest Rates (As of June 2025)
| Bank Name | Regular Citizens | Senior Citizens |
|---|---|---|
| Axis Bank | 3.00% – 7.05% | 3.50% – 7.55% |
| Bandhan Bank | 3.00% – 7.75% | 3.75% – 8.25% |
| Bank of Baroda | 4.00% – 7.10% | 4.50% – 7.60% |
| HDFC Bank | 3.00% – 7.05% | 3.00% – 7.05% |
| ICICI Bank | 3.00% – 7.05% | 3.00% – 7.55% |
| IDBI Bank | 3.00% – 7.00% | 3.50% – 7.50% |
| IndusInd Bank | 3.50% – 7.75% | 4.00% – 8.25% |
| Kotak Mahindra Bank | 2.75% – 7.15% | 3.25% – 7.65% |
| SBI (State Bank of India) | 3.50% – 6.90% | 4.00% – 7.40% |
| YES Bank | 3.25% – 7.50% | 3.75% – 8.25% |
Source: BankBazaar
Final Words
If you're waiting to invest in FDs, don’t delay. The interest rate cycle is heading downward, and locking in higher returns today can save you from regrets tomorrow.
