SBI Cuts Fixed Deposit Interest Rates: Millions of Customers Face Lower Returns from December 15

India’s largest public sector lender, State Bank of India (SBI), has delivered a major setback to its crores of customers by reducing interest rates on fixed deposits (FDs). With this move, investors—especially those who rely on FDs for safe and steady income—will now earn lower returns than before. The revised FD rates came into effect from December 15, 2025, and apply to deposits of less than ₹3 crore.

The decision follows the recent reduction in the RBI’s repo rate, after which several banks across the country have started trimming deposit rates. SBI’s move is being seen as part of a broader trend in the banking sector, where declining interest rates are impacting traditional savings instruments.

SBI Reduces FD Interest Rates by Up to 0.05%

According to the latest update, SBI has cut interest rates on most FD tenures by up to 0.05 percentage points. This reduction affects both general customers and senior citizens, although senior citizens continue to enjoy relatively higher rates under special schemes.

With the revision, SBI now offers FD interest rates ranging from 3.05% to 7.05%, depending on the tenure and customer category. The highest interest rate of 7.05% is currently available to senior citizens for long-term deposits.

SBI Fixed Deposit Tenure Options

State Bank of India offers fixed deposits with tenures starting from 7 days to 10 years, making it one of the most flexible FD portfolios among Indian banks. However, following the latest cut, returns across nearly all maturity periods have come down slightly.

Despite the reduction, SBI continues to position its FDs as a safe investment option, backed by government ownership and a strong balance sheet.

Latest SBI FD Interest Rates (Effective December 15, 2025)

Here are the updated interest rates offered by SBI on fixed deposits below ₹3 crore:

• 7 days to 45 days

  • General public: 3.05%

  • Senior citizens: 3.55%

• 46 days to 179 days

  • General public: 4.90%

  • Senior citizens: 5.40%

• 180 days to 210 days

  • General public: 5.65%

  • Senior citizens: 6.15%

• 211 days to less than 1 year

  • General public: 5.90%

  • Senior citizens: 6.40%

• 1 year to less than 2 years

  • General public: 6.25%

  • Senior citizens: 6.75%

• 2 years to less than 3 years

  • General public: 6.40%

  • Senior citizens: 6.90%

• 3 years to less than 5 years

  • General public: 6.30%

  • Senior citizens: 6.80%

• 5 years to 10 years

  • General public: 6.05%

  • Senior citizens: 7.05%

Under the SBI WeCare Deposit Scheme, senior citizens receive an additional 0.50% interest on select long-term fixed deposits, which helps partially offset the impact of rate cuts.

Why Are FD Rates Falling?

The primary reason behind the reduction in FD rates is the cut in the RBI’s policy repo rate, which lowers borrowing costs for banks. When liquidity in the system is comfortable and loan demand is stable, banks tend to reduce deposit rates to manage their overall cost of funds.

Additionally, with inflation showing signs of moderation and bond yields stabilizing, banks have less incentive to offer higher interest rates on deposits.

What Does This Mean for Investors?

For conservative investors—especially retirees and senior citizens—this rate cut may come as a disappointment. Fixed deposits have traditionally been a preferred investment option due to their safety and predictable returns. Lower interest rates mean reduced monthly or quarterly income from FDs.

Existing FD holders, however, need not worry. Deposits booked before December 15, 2025, will continue to earn interest at the old rates until maturity. The revised rates apply only to new deposits and renewals made on or after the effective date.

Should You Reconsider Your Investment Strategy?

With FD rates gradually declining, investors may want to:

• Compare FD rates across different banks

• Look at special FD schemes for senior citizens

• Consider diversifying into other low-risk instruments based on financial goals

That said, FDs remain one of the safest investment avenues, especially for risk-averse individuals.

Bottom Line

SBI’s decision to cut fixed deposit interest rates has impacted millions of customers across the country. While the reduction is relatively small, it reflects a larger trend of falling interest rates in the banking sector. Investors should stay informed, review their savings strategy, and make decisions based on current rates, liquidity needs, and long-term financial goals.

Note: Interest rates are subject to change. Customers are advised to check SBI’s official website or visit a branch for the latest updates before investing.