Banks Lower Fixed Deposit Interest Rates Amid RBI's Monetary Policy Adjustments

Most banks in India have revised their fixed deposit (FD) interest rates downwards following the Reserve Bank of India's (RBI) decision to cut the repo rate to 5.5% in its June monetary policy review. The RBI's Monetary Policy Committee (MPC) reduced the repo rate by 50 basis points on June 6. This rate cut has made borrowing cheaper for individuals and businesses but has impacted returns on FDs and savings accounts. As a result, major banks such as State Bank of India (SBI), HDFC Bank, Bank of Maharashtra, and Axis Bank have lowered their FD rates to 6.25% for deposits up to Rs 3 crore with a one-year tenure.

Key Takeaways:

State Bank of India (SBI) has reduced its FD rates to 6.25% from 6.5% for the one-to-two-year tenure.
HDFC Bank, Bank of Maharashtra, Axis Bank, and others have reduced their FD rates to 6.25% for deposits up to Rs 3 crore with a one-year tenure.
SBI is offering an interest rate of 6.05% per annum for a five-year period while HDFC is offering 6.4% returns.
Investors looking to put their money in FDs should analyze whether the current returns align with their financial targets.
FD returns are not impacted by market volatility, making them a suitable option for risk-averse investors.
A Rs 5 lakh deposit in HDFC Bank's five-year FD could earn Rs 1,86,823 in interest, resulting in a final corpus of Rs 6,86,823.

Statistics:

Repo rate cut by RBI: 50 basis points
Current repo rate: 5.5%
SBI's reduced FD rate: 6.25% (one-to-two-year tenure)
HDFC Bank's reduced FD rate: 6.25% (deposits up to Rs 3 crore, one-year tenure)
SBI's interest rate for a five-year period: 6.05% per annum
HDFC's interest rate for a five-year period: 6.4% per annum
Interest earned on a Rs 5 lakh deposit in HDFC Bank's five-year FD: Rs 1,86,823
Final corpus for a Rs 5 lakh deposit in HDFC Bank's five-year FD: Rs 6,86,823

Sources:

Reserve Bank of India (RBI)
Contify.com
The Northlines (2025)