Repo rate effect on FD interest: The Reserve Bank of India on Wednesday has kept the repo rate unchanged at 5.25 per cent, maintaining a 'neutral' policy stance amid the West Asia tensions.
Following the update, fixed deposit investors can expect a rise in their interest rates in the coming months.
Reserve Bank of India Governor Sanjay Malhotra, in his MPC speech, said that the West Asia conflict will impact India's GDP growth this year even as fundamentals remain strong. The MPC opined that the intensity and duration of conflict and its damage to infrastructure is a risk to inflation and growth outlook.
The Reserve Bank of India has pegged India's real GDP growth for the previous financial year at 7.6 per cent under the new GDP series, Governor Malhotra said, while cautioning that rising global geopolitical disruptions pose emerging risks to the outlook. For FY27, however, the central bank expects growth to moderate to 6.9 per cent, reflecting the impact of external uncertainties and increasing cost pressures.
Impact of staggered repo rate cuts on FD returns
Here's a breakdown of potential returns and interest lost per Rs 1 lakh
At 7.25 per cent FD rate: Returns - Rs 7,250 | Interest lost - Rs 0
At 7.00 per cent FD rate: Returns - Rs 7,000 | Interest lost- Rs 250
At 6.75 per cent FD rate: Returns - Rs 6,750 | Interest lost - Rs 250
At 6.50 per cent FD rate: Returns - Rs 6,500 | Interest lost - Rs 250
Last year, the RBI cut the repo rate by 125 basis points, leading to a decline in interest rates offered on fixed deposits. However, since then, the central bank has consistently maintained the repo rate at a steady level, providing some relief to many FD investors. This pause could prove to be quite significant, particularly in light of the shifting geopolitical landscape caused by the ongoing conflict, which is driving up inflation. While it is unlikely that banks will immediately raise FD rates, the possibility of a rate hike in the coming months cannot be ruled out either.
FD rates do not depend solely on the repo rate; rather, they are also influenced by liquidity conditions, inflation trends, G-Sec yields, and competition from small savings schemes.
Repo rate-brief history
| Date | Repo rate | Change |
| 07-Feb-25 | 6.25 per cent | 0.25 per cent |
| 09-Apr-25 | 6.00 per cent | 0.25 per cent |
| 06-Jun-25 | 5.50 per cent | 0.50 per cent |
| 06-Aug-25 | 5.50 per cent | 0.00 per cent |
| 05-Dec-25 | 5.25 per cent | 0.25 per cent |
| 06-Feb-26 | 5.25 per cent | 0.00 per cent |
| 08-Apr-26 | 5.25 per cent | 0.00 per cent |
Highest FD interest rates - Public sector banks
| Bank Name | Highest interest rate | Tenure |
| Canara Bank | 6.6 per cent | 555 days |
| Indian Bank | 6.6 per cent | 444 days |
| Bank of India | 6.6 per cent | 450 days |
| Bank of Maharashtra | 6.65 per cent | 400 days |
| Punjab & Sind Bank | 6.75 per cent | 666 days |
Highest FD interest rates - Private sector banks
| Bank Name | Highest interest rate | Tenure |
| RBL Bank | 7.2 per cent | 18 months-30 years |
| IDFC First Bank | 7.4 per cent | 390 days |
| SBM Bank India | 7.3 per cent | More than 18 months, but less than 2 years and 3 days |
| Bandhan Bank | 7.25 per cent | 2 years or less than 5 years |
| Jammu & Kashmir Bank | 7.25 per cent | 888 days |
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