Canara Bank FD: Public sector Canara Bank has revised its fixed deposit (FD) interest rates. Select short- and mid-term tenors now offer the best returns. The revised interest rates have become effective. The bank is offering senior citizens a maximum interest rate of 7 percent on callable fixed deposits, one of the highest rates available despite the current soft interest rate environment. Interest rates have been under pressure in recent months following the Reserve Bank of India’s (RBI) monetary policy easing.
Canara Bank FD Rates
Under the revised framework, special tenure FDs, especially for senior citizens, are offering more attractive returns than long-term deposits. According to a report, while a 555-day fixed deposit offers 6.50% interest to a general customer, a senior citizen is offered 7.00% (highest callable rate). Similarly, a 444-day fixed deposit offers 6.45% interest to a general customer, while a senior citizen is offered 6.95% interest.
However, Canara Bank’s FD interest rates for most other callable periods above one year remain capped at 6.25% for general customers and 6.75% for senior citizens. This means that there is no longer the benefit of additional interest for locking in money for a longer period.
Impact of RBI rate cut on FD returns
This softening of FD rates comes amid the Reserve Bank of India’s continued monetary easing policy. Since last year, the RBI has cut the repo rate by a total of 125 basis points. The recent 25 basis point cut has brought the repo rate down to 5.25 percent. Reductions in policy rates reduce banks’ funding costs, leading them to gradually reduce deposit rates, especially on long-term FDs. As a result, bank FD returns have steadily declined over the past year, with multi-year deposits being the most affected.
