Bank fixed deposits in 2026: 2025 in review and what's ahead for FD investors in the New Year

In 2025, the Reserve Bank of India (RBI) reduced the repo rate four times in its monetary policy meetings. Banks lowered fixed deposit (FD) interest rates for short- and medium-term terms as a result of these reductions.

How banks responded to repo rate cuts

HDFC Bank: The first private bank to reduce FD rates, peak rates fell from 7.25% to around 6.8%

SBI: Trimmed select short-term FDs by 5–10 bps

Canara Bank & Bank of India (BOI): Started lowering rates by 10–15 bps

SBI: Revised FD rates for deposits below ₹3 crore, effective April 15, reducing select tenures by 10 bps

HDFC Bank & ICICI Bank: Aligned FD rates downward to reflect policy easing

BOI: Slashed FD rates by up to 25 bps.

Canara Bank: Trimmed rates by up to 20 bps for certain deposits

HDFC Bank: Reduced longer-term FDs (2 years 11 months by 35 bps, 4 years 7 months by 40 bps)

Yes Bank: Lowered rates for 12–24 month deposits by 25 bps

Other banks: Kotak Mahindra Bank, IDFC Bank, Indian Bank, and PNB also revised rates, especially for deposits below ₹3 crore

Year-end FD rates across banks

The RBI’s four repo rate cuts in 2025 triggered successive FD rate reductions across major banks.

What FD investors should expect in 2026

With inflation showing signs of moderation and economic growth stabilising, the Reserve Bank of India (RBI) is widely expected to continue its rate-cut cycle.

Banks would probably decrease deposit rates in response to the RBI's reduction of the repo rate. This could progressively make fixed deposits less appealing, particularly to investors who depend on them as their main source of consistent income.

Lower FD rates would mean reduced returns on new deposits and renewals. In order to preserve income and purchasing power during a lowering rate cycle in 2026, investors might need to supplement FD with other low-to-moderate risk products, such debt mutual funds, RBI bonds, or others.