Fixed deposits (FDs) have always been a favorite choice for Indian investors who prefer safety and guaranteed returns. Now, with the Reserve Bank of India (RBI) cutting the repo rate by 0.25% for the second time in a row during its April 2025 monetary policy meeting, it has opened a window of opportunity for those planning to invest in fixed returns.
Why FD Investment Now Makes Sense
RBI has not only reduced the repo rate—currently standing lower than before—but also changed its policy stance to “accommodative”, hinting that more rate cuts could happen in the near future. When the repo rate is lowered, banks gradually reduce the interest they offer on fixed deposits to adjust their cost of funds.
This means the interest rates you see on FDs today might not be available in a few weeks or months. If you are planning to invest in FDs for the short or medium term—say 1 to 3 years—this is a great time to act fast.
Short-Term and Mid-Term FD Rates Drop First
Typically, banks first revise interest rates for short and medium tenure FDs, followed by long-term FDs. So, people looking to park their money for a 1 to 3-year duration should move quickly to lock in current interest rates.
Several banks have already started to trim their FD rates slightly after the repo rate cut in February 2025. With another cut in April, this trend is expected to continue.
Senior Citizens Still Get Good FD Benefits
For senior citizens, FD remains one of the safest and most rewarding investment options. Most banks offer an extra 0.50% interest to senior citizens.
Even if general FD rates start falling, seniors can still enjoy slightly better returns by booking their FDs now. It’s also worth checking special FD schemes that are tailor-made for older investors before they are withdrawn by the banks.
High Net Worth Investors Can Use Non-Callable FDs
Non-callable FDs, which cannot be withdrawn before maturity, often offer higher interest rates. These are great options for high net worth individuals (HNIs) looking to park large amounts for a fixed return.
While some banks have started lowering these rates, there’s still time to get better yields if investments are made soon.
Special FD Schemes Are Being Discontinued
Many banks had introduced special FDs with high interest rates on specific tenures like 400 or 600 days. However, with the RBI signaling future rate cuts, banks are withdrawing these high-return offers.
If you see a special FD scheme offering interest rates above the regular rates, it’s better to grab the opportunity before it disappears.
SFBs Offer Better Returns but Choose Wisely
If you’re open to a little extra risk, Small Finance Banks (SFBs) can be considered. These banks are currently offering some of the highest FD interest rates in India—often above 8% for certain tenures.
However, do remember that only up to Rs. 5 lakh per bank is insured under DICGC (Deposit Insurance and Credit Guarantee Corporation). If you plan to invest more than Rs. 5 lakh, it’s safer to split your investment across multiple SFBs or across different account holders.
Final Thought: Lock Your FD Before Interest Rates Go Down
This is a window of opportunity for people looking for safe, fixed income. The market trend clearly shows that FD rates may continue to slide if the RBI cuts the repo rate further. Locking your money in an FD now can ensure better returns than waiting for a few months.
Whether you’re a retiree, a conservative investor, or someone planning for a medium-term financial goal, consider using this phase to secure your returns by booking a fixed deposit before banks revise their interest rates downward.
