SBI, HDFC, ICICI, and other bank's customer? Know how repo rate cut will impact fixed deposit

Fixed deposit interest rates in SBI, HDFC Bank, ICICI Bank, and all other banks are likely to reduce further after the RBI decides to reduce the repo rate by 50 basis points (bps).

Most of these banks have already been reducing their FD rates since February 2025, when the RBI first decided to reduce the repo rate this year.

"After having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the current circumstances, monetary policy is left with very limited space to support growth. Hence, the MPC also decided to change the stance from accommodative to neutral," it added.

Fixed Deposit rates are going to decline further when banks start transmitting the impact of the latest policy rate cut on fixed deposits. The SBI Research recently predicted that transmission is likely to be strong in the coming quarters.

"Banks have already reduced interest rates on savings accounts to floor rate of 2.70%. Also, fixed deposits (FDs) rates have been reduced in the range of 30-70 bps since February 2025. Transmission to deposits rates is expected to be strong in the coming quarters," SBI Research said.

What are the options for depositors now?

The repo rate cut will not impact your existing fixed deposits. Any reduction in interest rates by banks will apply to a new fixed deposit account. So if you already have a fixed deposit account, you should continue it till maturity.

Depositors can book their FDs now before banks start further cutting their deposit rates. Check highest FD rates of some banks in the following table:

Source: Respective bank websites as of June 6, 2025.

Alternatively, depositors may look for small savings schemes like SCSS, NSC, and various other Post Office deposit options after comparing the interest rates.

Depositors may also look at investing in safe and highly-rated corporate bonds offering higher than FD rates, or consider investing in debt funds or mutual funds.