Don't miss your opportunity to lock-in high fixed deposit rates
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If you are planning to deposit your money into a bank fixed deposit (FD) don't delay any further. With the Reserve Bank of India (RBI) cutting the repo rate, banks are likely to cut fixed deposit (FD) rates further to protect their margins. But still there is a small window of opportunity to lock in prevailing FD interest rates, before they are re-adjusted.
On 6 June, the RBI in a surprise move cut the repo rate by 50 basis points (bps) after a 25bps cut in previous monetary policy. The central bank also cut cash reserve ratio (CRR) by 100bps. A basis point is one-hundredth of a percentage point.
Also Read: Voluntary Provident Fund offers high interest rates. But withdrawals are a pain.
CRR is the percentage of a bank's deposits that it must keep with the central bank in the form of cash. Repo rate is the interest rate at which commercial banks borrow money from the central bank.
Window of opportunity
'There is a brief opportunity window for investors to lock in the higher FD rates at this point, before they potentially see a downfall. In the current economic situation, locking in current rates can turn out to be a strategic move. Any future change in repo rates by the RBI will depend on several factors, like inflation trends, economic growth, and financial global conditions, which may take some time to stabilize," said Raj Khosla, founder and managing director of MyMoneyMantra.com.
'Banks have already been reducing rates for past few months following the RBI's last rate cut, but investors can take advantage of prevailing rates, before they drop any further," said Joydeep Sen, a corporate trainer (financial markets) and author.
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Some banks have already reduced interest rates on savings accounts to reduce the stress on margins. Also, banks have redued FD rates in the range of 30-70bps since February 2025, according to a research report, Ecowrap by State Bank of India (SBI). "Transmission to deposits rates is expected to be strong in the coming quarters with further rate cut in deposits expected from banks," it added.
'For depositors, a 50 bps repo rate cut may not slash FD rates overnight, but it does signal the beginning of a downward trend. Banks are likely to start trimming deposit rates, especially for short- and medium-term tenures. If you've been waiting to lock in current rates, some of which still hover around 7.5%, now may be the time. Senior citizens, who enjoy an extra 25-50bps, should consider locking in longer tenures," said Adhil Shetty, chief executive of BankBazaar.com.
Also Read: Monetary policy: We live in interesting times for interest rates
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