The country’s largest lender, State Bank of India (SBI), has again cut the interest rates on retail deposits, shocking its crores of customers. The bank has reduced the short-term interest rates by 15 basis points. These revised interest rates have become effective from July 15, 2025. This is the third time in the current financial year 2025-26 that the bank has cut the deposit rates.
Earlier, in June, SBI had reduced the interest rate on savings deposits by 20 basis points to 2.5 percent. This decision has come after a continuous reduction in repo rate by the RBI and improvement in liquidity in the market, which will help in reducing the pressure of interest margin on banks.
Why did SBI reduce interest rates?
Amid a reduction in repo rate by the RBI and improvement in liquidity, SBI has decided to reduce short-term deposit rates. A total of 60 basis points have been cut on short-term deposits in the current financial year. This reduction has been done to handle the pressure of interest margin on banks since the beginning of the financial year, as the availability of cash in the market has increased.
New Rates for Regular Customers
According to the information available on the website of SBI Bank, the new interest rates on Fixed Deposits (FDs) of different tenures for regular customers will now be as follows:
Maturity Old Interest Rate New Interest Rate
46 days to 179 days 5.05% 4.90%
180 days to 210 days 5.80% 5.65%
211 days to 1 year 6.05% 5.90%
7 days to 45 days 3.05% 3.05%
New Rates for Senior Citizens
FD interest rates have also been reduced for senior citizens:
Maturity Old Interest Rate New Interest Rate Rate
46 days to 179 days 5.55% 5.40%
180 days to 210 days 6.30% 6.15%
211 days to 1 year 6.55% 6.40%
7 days to 45 days 3.05% 3.05%
SBI has not changed the interest rates on FDs of various tenures above 1 year and up to 10 years. On a 5-year Tax Saver FD, SBI is offering 6.05 percent interest to regular customers and 7.05 percent interest to senior citizens (this includes 0.50% additional interest of SBI V-Care scheme).
SBI’s interest income increased, but the margin decreased
According to SBI’s results for the fourth quarter of FY 2024-25, the bank’s net interest margin (NIM) from domestic operations has declined by 21 basis points to 3.22 percent from 3.43 percent in the same period last year. During this period, the bank’s net interest income (NII) increased to ₹ 42,775 crore on a year-on-year basis. It registered a growth of 3.21 percent every quarter. This shows that the bank’s income has increased, but its profit margin is under pressure.
RBI reduced repo rate three times in a row
The Reserve Bank of India (RBI) is continuously cutting interest rates to accelerate economic growth. In the June monetary policy, the RBI had made a big cut of 50 basis points (0.50%) in the repo rate. With this, the repo rate has come down to 5.50%. Earlier, the repo rate was also cut by 0.25%-0.25% in February 2025 and April 2025. Apart from this, the Reserve Bank has reduced the Cash Reserve Ratio (CRR) from 4 percent to 3 percent. Also, the policy stance has been changed from ‘accommodative’ to ‘neutral’, indicating more flexibility in future policies.