RBI Repo Rate Cut – FD Rates Touch 8% Even as Loan EMIs May Get Cheaper

RBI Repo Rate Cut — The Reserve Bank of India has officially announced a 0.25% cut in the repo rate, bringing it down to 5.25%. With this reduction, borrowers may soon see relief in loan EMIs as banks get access to cheaper funds. However, the same move could trigger a gradual decline in Fixed Deposit (FD) interest rates in the coming weeks.

If you are planning to lock your money in an FD, this may be the ideal time before banks lower their deposit rates.

How Does the Repo Rate Impact Interest Rates?

The repo rate is the rate at which the RBI lends money to commercial banks. When the repo rate increases, borrowing becomes more expensive for banks, and they often pass on the burden to customers by making loans costlier.

But when the repo rate is reduced, banks can obtain funds from the RBI at a lower cost. As a result, they feel less pressure to attract customer deposits and begin lowering the interest rates on FDs. This is why a repo rate cut usually leads to a drop in deposit interest rates.

Why FD Rates May Fall Soon?

Banks require steady deposits to maintain liquidity, and attractive FD rates help them gather more funds from the public.

However, after the RBI’s latest rate cut, banks now have easier access to cheaper money. In such a situation, there is little motivation to offer high interest rates on FDs, and many banks may soon revise their rates.

This is why investors seeking stable returns often lock in their money quickly before revised deposit rates take effect.

Banks Currently Offering Up to 8% Interest on 5-Year FDs

Despite the repo rate cut, some small finance banks are still offering up to 8% interest on 5-year fixed deposits. Here are the leading options available right now:

Suryoday Small Finance Bank – 8% Interest

Suryoday Small Finance Bank is offering 8% per annum on 5-year FDs. The revised rates came into effect on December 3. Both regular customers and senior citizens can benefit from these attractive returns.

Jana Small Finance Bank – 8% Interest

Jana Small Finance Bank is also offering 8% on 5-year deposits for regular customers. This makes it one of the most competitive FD options in the market at the moment.

Ujjivan Small Finance Bank – 7.2% Interest

Ujjivan Small Finance Bank is offering 7.2% interest on 5-year FDs. While the rate is slightly lower compared to Suryoday and Jana, it is still higher than most traditional banks.

Should You Lock Your FD Now?

With the repo rate cut already announced, banks may soon revise their FD interest rates downward.

For investors seeking stable, secure returns, this could be the right time to finalise long-term deposits, especially at small finance banks currently offering rates as high as 8%.