The Reserve Bank of India (RBI) has reduced the repo rate to 6.25% after five years, which is likely to affect the interest rates offered by banks on fixed deposits (FDs). While the reduction in repo rate could lead to lower loan rates, it may also result in banks reducing their FD interest rates. Senior citizens can benefit from the interest rates offered by small finance banks, with Utkarsh Small Finance Bank offering 9.42% interest on deposits maturing in 1500 days and AU Small Finance Bank offering 8.88% interest on FDs maturing in 18 months. Other small finance banks, such as ESAF, Suryodaya, and Jana, also offer competitive rates ranging from 8.88% to 9.42%.
Major banks in India, including HDFC Bank, ICICI Bank, Axis Bank, and State Bank of India, offer interest rates ranging from 3% to 7.85% on FDs with durations varying from 1 day to 10 years. For example, HDFC Bank offers 7.85% interest on FDs with a tenure of 2 years and 1 day to 2 years 100 months.
Fixed deposits are considered a low-risk investment option, providing guaranteed returns and safety of principal. The interest rates offered by banks on FDs vary depending on the tenure, with longer tenures typically offering higher interest rates. Banks may offer interest rates between 3% to 8% on FDs, depending on the duration. The reduction in repo rate by the RBI may lead to changes in FD interest rates, making it essential for investors to monitor the developments and explore options that suit their financial goals and risk appetite.