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RBI Repo Rate 2025: With fixed deposit rates closely tied to the repo rate trend, the 25 basis point cut in repo rate signals a downward path for deposit returns — especially for short- to medium-term FDs.
With two rate cuts already in place and more likely in the coming quarters, banks are expected to gradually reduce deposit rates.
RBI Repo Rate 2025 Impact On FD Rates: The Reserve Bank of India (RBI), in its latest monetary policy review held on Wednesday, cut the key repo rate by 25 basis points to 6%, setting the stage for a further fall in FD interest rates. The central bank has also shifted its monetary policy stance from “neutral” to “accommodative”, indicating a higher probability of future repo rate cuts in 2025.
With fixed deposit rates closely tied to the repo rate trend, this development signals a downward path for deposit returns — especially for short- to medium-term FDs.
FD Interest Rates: What To Expect?
“With two rate cuts already in place and more likely in the coming quarters, banks are expected to gradually reduce deposit rates. Some banks have already started cutting interest rates on fixed deposits (FDs),” a banker told news18.com.
Ankur Jalan, CEO of Golden Growth Fund (GGF), a category II Real Estate focused Alternative Investment Fund (AIF), also said with expectations of another 50 bps cut in repo rate in FY26, the fixed deposit interest rates are likely to decline.
Recently, Yes Banks revised downwards its FD interest rates. Following this, Equitas Small Finance Bank (SFB), a prominent player in the private banking sector, has revised its fixed deposit (FD) interest rates for deposits under Rs 3 crore, with the new rates coming into effect from April 7, 2025. Post-revision, Equitas SFB is now offering FD interest rates ranging from 3.50 per cent to 8.05 per cent for regular depositors.
What Should FD Investors Do Now?
If you’re relying on FDs for stable returns, the window to act is narrowing.
Ankur Jalan said, “The decline in fixed deposit rate will disincentivise HNI/UHNI investors, prompting them to look for potentially high return asset class like AIFs which not just has regulatory oversight but also offers risk diversification and high returns.”
‘Lock in Long-Term FDs Immediately’
Secure current rates — especially for 2-5 year tenures — before banks begin rate reductions across the board, according to the banker.
‘Look for Non-Callable and Senior Citizen Schemes’
Adhil Shetty, CEO of BankBazaar.com, said high networth depositors can benefit from higher rates available on non-callable deposits.
‘Diversify into Corporate Bonds, Gilt Funds’
For those willing to take slightly higher risk for potentially better returns, gilt funds, short-duration bond funds, and corporate bond funds may benefit from falling yields in the coming months.
Murthy Nagarajan, head (fixed income) at Tata Asset Management, said, “Investors may consider investing in duration products to take advantage of fall in yields in the coming months. Gilt fund , corporate bonds and short-term bond fund may be part of core portfolio to take advantage of fall in yields. For accruals, investors may look to invest in money market and ultra short-term bond fund.”
The RBI on Wednesday reduced the key repo rate by 25 basis points to 6 per cent. It also cut the SDF to 5.75 per cent, and MSF and Bank Rates to 6.25 per cent. The SDF is the lower band of the interest rate corridor, while the MSF is the upper band.
A basis point is a 100th of a percentage point.
The cash reserve ratio (CRR) stands same at 4 per cent and the statutory liquidity ratio (SLR) at 18 per cent.
