The Reserve Bank of India’s recent 0.25% reduction in the repo rate has led to a significant drop in fixed deposit (FD) interest rates. Six small finance banks, including Ujjivan Small Finance Bank, Suryoday Small Finance Bank, City Union Bank, Shivalik Small Finance Bank, DCB Bank, and Union Bank, have announced revised FD interest rates effective February 2025. These institutions are scrambling to attract senior citizens seeking stable income sources post-retirement.
Ujjivan Small Finance Bank, for instance, offers interest rates ranging from 4.25% to 8.75% for deposits below Rs 3 crore. Suryoday Small Finance Bank offers an interest rate of 8.75% on deposits ranging from one to three years and 9.1% for deposits of five years. These rates are especially attractive for senior citizens, who are often the primary target audience for these banks.
The revised rates are a response to the changing economic landscape, with banks competing to attract deposits amid fluctuating market conditions. While the Reserve Bank of India’s rate cut is expected to lead to reduced FD rates, these six banks have taken a strategic approach, offering competitive rates to safeguard their positions.
The revised FD rates are also a reflection of the banks’ commitment to providing stable returns to their depositors, particularly senior citizens. As the economy continues to evolve, it’s likely that FD rates will remain under scrutiny, and banks will continue to adjust their rates to stay competitive and attract deposits. For senior citizens, these revised rates offer a chance to secure a stable income source post-retirement.