Several banks have lowered their fixed deposit rates after the Reserve Bank of India (RBI) reduced the repo rate last month. The repo rate is the interest rate at which the RBI lends money to commercial banks.
In early June, the RBI cut the repo rate to 5.5%, citing favourable economic conditions. This made borrowing cheaper for banks, triggering their decision to lower interest rates on FD returns and savings accounts.
Top lenders, including the State Bank of India, HDFC Bank, IDBI Bank, Axis Bank, Bank of Maharashtra, among others, have announced changes to their FD rates. For instance, SBI has lowered its interest rate on term deposits of one to two years from 6.50% p.a. to 6.25% p.a. This change applies to regular deposits under Rs 3 crore and are in effect from June 15 onwards, its website states.
Similarly, from June 25, top private lender HDFC Bank is offering an interest rate of 6.25% per annum on fixed deposits under Rs 3 crore. To be clear, the interest rate of 6.25% p.a. applies specifically to deposits with a tenure of one year to less than 15 months. The rates for other durations may vary.
Effective from June 12, Axis Bank offers an interest rate of 6.25% p.a. for fixed deposits with a tenure ranging from one year to one year and 10 days. On the other hand, for the same deposit value, Suryoday Small Finance Bank currently offers an interest rate of 7.90% per annum for one‑year fixed deposits.
Compared to major banks, Yes Bank is offering a competitive rate of 6.75% p.a. on fixed deposits with a 12-month tenure for under Rs 3 crore deposits. Similarly, Bank of Maharashtra is offering an interest rate of 6.70% per annum on fixed deposits with a tenure of 366 days for up to Rs 3 crore deposits.
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