If you are thinking of investing money in bank fixed deposits (FD), then this news may not seem like good news to you. There is a trend of continuous decline in FD interest rates in the year 2025. The main reason for this is the monetary policy of the Reserve Bank of India (RBI). RBI has reduced the repo rate twice this year, after which banks are also reducing interest rates on FD.

With a reduction of 25 basis points in February 2025 and then 25 basis points in April 2025, the repo rate has now come down from 6.5% to 6% (6.00%). This situation is a matter of concern for those who want to keep their savings safe as well as get good returns on them, especially for our senior citizens.

SBI reduced interest rates twice

State Bank of India (SBI) has been at the forefront in reducing interest rates on FDs. SBI has cut interest rates on FDs of different tenures by up to 20 basis points. This cut has become effective from May 16, 2025. Earlier, SBI had also cut interest rates on FDs on April 15, 2025.

Other banks have also cut interest rates on FDs. Due to this cut, the interest rate on 7-45 days deposits of more than ₹3 crore has come down from 3.5% to 3.3%. Interest rates on long-term FDs have come down from 6.9% to 6.7%. This change shows that savers should now expect lower returns.

‘Shock’ on ‘Amrit Vrishti’ scheme too

Senior citizens are already getting higher interest on FDs. Earlier, they used to get 4 to 7.5% interest on FDs. Now they are getting 7.3% interest on 5-10 year FDs. SBI has reduced the interest rate on its special scheme ‘Amrit Vrishti’ for 444 days from 7.05% to 6.85%.

For senior citizens, it has been reduced from 7.55% to 7.35%. For super senior citizens (80 years and above), it has now become 7.45%. This reduction is disappointing for those who were expecting higher returns through this special scheme.

HDFC Bank also reduced rates

Other banks have also reduced interest rates on FDs. HDFC Bank has cut interest rates on select tenure FDs by up to 50 basis points. Now the bank is offering interest rates ranging from 3% to 7.1% to general customers, while senior citizens are being offered rates ranging from 3.5% to 7.55%. These rates are for deposits less than ₹ 3 crore. This move by HDFC Bank also reflects the growing trend in the market.

ICICI Bank and Axis Bank also gave a shock

ICICI Bank also announced a cut in FD interest rates by up to 50 basis points on April 17, 2025. At present, it is offering interest ranging from 3% to 7.05% on FDs to general customers and senior citizens. Axis Bank has also reduced interest rates on FDs. Now the bank is offering interest ranging from 3% to 7.55% on FDs less than ₹ 3 crore. Customers investing in FDs will also suffer a direct loss due to this decision of these banks.

Senior citizens are mostly affected

Many people in India, especially senior citizens, still prefer to keep their money in bank FDs. They consider it the safest. Many senior citizens depend on interest from FDs for their daily expenses. The reduction in interest rates by banks will also reduce their interest income. This can be understood with an example:

With the reduction of 20 basis points in interest by SBI, senior citizens will now get Rs 1,000 to Rs 2,000 less interest annually on a 5-year FD of Rs 5 lakh. This is a big challenge for those who depend on FDs for their retirement. In this situation, senior citizens may need to reconsider their investment portfolio and look for alternatives, so as to minimize this negative impact on their income.