Fixed Deposits (FDs) have long been a preferred savings tool for millions of Indians, especially among conservative investors and senior citizens. However, Canara Bank reduced FD interest rates recently, creating ripples across the banking and financial sectors. The new rates, effective from April 10, 2025, reflect a strategic response to recent monetary policy changes by the Reserve Bank of India (RBI).
Canara Bank Reduced FD Interest Rates
| Particulars | Details |
|---|---|
| Effective Date | April 10, 2025 |
| Rate Reduction | Up to 20 basis points (0.20%) |
| Applicable on | FDs below Rs 3 crore (callable deposits) |
| Highest FD Rate (General Public) | 7.25% for 444-day special scheme |
| Highest FD Rate (Seniors) | 7.75% for 444-day special scheme |
| Senior Citizen Benefit | Additional 0.50% interest on FDs of 180 days and above |
| Reason for Cut | RBI’s repo rate cut to 6.00% on April 5, 2025 |
| Official Website | canarabank.com |
The fact that Canara Bank reduced FD interest rates may feel disappointing to some savers, but it’s part of a broader economic shift following the RBI’s repo rate cut. While returns may dip slightly, Canara Bank still offers competitive, secure, and convenient FD investment options—especially with its special 444-day scheme. Always review your financial goals before investing and explore alternative avenues if you’re looking for higher returns.
Why Did Canara Bank Reduce FD Interest Rates?
The decision to reduce FD rates was influenced by the RBI’s move to lower the repo rate by 25 basis points to 6.00% in April 2025. As a result, banks are adjusting their deposit and lending rates to align with lower borrowing costs.
Repo rate cuts generally lead to reduced interest income from FDs, but also lower the cost of borrowing for businesses and individuals. Canara Bank’s decision reflects this broader monetary strategy, aiming to maintain competitiveness while balancing profitability.
Tip: Keep track of RBI policy announcements—they directly impact your savings returns.
see also: Where Are Senior Citizens Getting the Highest Interest on FDs?
New Canara Bank FD Interest Rates (Below Rs 3 Crore)
These revised rates are applicable to callable FDs, i.e., deposits that can be withdrawn prematurely with a penalty.
General Public
| Tenure | Interest Rate (%) |
|---|---|
| 7 to 45 days | 4.00 |
| 46 to 90 days | 5.25 |
| 91 to 179 days | 5.50 |
| 180 to 269 days | 6.15 |
| 270 days to less than 1 year | 6.25 |
| 1 year | 6.85 |
| 444 days (Special Scheme) | 7.25 |
| >1 year to <2 years | 6.85 |
| 2 years to <3 years | 7.15 |
| 3 years to <5 years | 7.20 |
| 5 years to 10 years | 6.70 |
Senior Citizens
| Tenure | Interest Rate (%) |
|---|---|
| 180 to 269 days | 6.65 |
| 270 days to less than 1 year | 6.75 |
| 1 year | 7.35 |
| 444 days (Special Scheme) | 7.75 |
| >1 year to <2 years | 7.35 |
| 2 years to <3 years | 7.65 |
| 3 years to <5 years | 7.70 |
| 5 years to 10 years | 7.20 |
Note: No additional benefit for senior citizens on FDs below 180 days.
How Much Has the Rate Been Reduced?
The rate cut varies depending on tenure, but most tenures have seen a reduction of 10 to 20 basis points (0.10% to 0.20%). Here’s a simple example:
- The 1-year FD previously offered 7.05%, but now offers 6.85% for the general public.
- The special 444-day scheme remains attractive with no change at 7.25% for the general public.
What This Means for You
If you’re planning to invest or renew your FD:
- Act fast if you find a better rate elsewhere before locking in.
- Senior citizens should still consider Canara Bank, given the 0.50% extra interest.
- Diversify your FD tenure to balance between returns and liquidity.
Is It Still Worth Investing in Canara Bank FDs?
Yes, especially for risk-averse investors and retirees looking for stable returns and safety. Here’s why:
- Government-backed bank: High trust and security.
- Attractive special scheme: 444-day tenure still offers among the highest FD returns.
- Convenient auto-renewal and online FD booking through Canara Net Banking.
However, you might want to compare with other banks. Some private sector banks or small finance banks still offer slightly higher rates, albeit with different risk profiles.
Alternatives to Fixed Deposits
If you’re disappointed by the FD rate cut, consider these options:
1. Debt Mutual Funds
- Market-linked, moderately risky.
- Better post-tax returns if held over 3 years.
2. Senior Citizen Savings Scheme (SCSS)
- 8.2% annual interest (as of Q1 FY 2025-26)
- Backed by the Government of India.
3. RBI Floating Rate Bonds
- 7.7% interest rate, adjusted every 6 months.
- Locked in for 7 years.
4. Post Office Time Deposits
- 1 to 5-year options, interest up to 7.5%.
Always assess your risk tolerance, liquidity needs, and tax implications before switching.
see also: NPS vs Mutual Funds: Who is Giving Higher Returns?
Canara Bank Reduced FD Interest Rates FAQs
1. What is the new highest FD interest rate in Canara Bank?
The highest rate is 7.25% for the general public and 7.75% for senior citizens under the 444-day special FD scheme.
2. Why did Canara Bank cut FD rates in April 2025?
The cut follows the RBI’s decision to lower the repo rate to 6%, prompting banks to realign deposit and lending rates.
3. Can I withdraw my FD early from Canara Bank?
Yes, but there may be a penalty of 1% on the applicable interest rate for premature withdrawals.
4. Are Canara Bank FDs safe?
Yes, as it is a public sector bank regulated by the RBI. FDs up to ₹5 lakh are insured under DICGC.
5. How do I open a Canara Bank FD online?
Use Canara NetBanking or Mobile Banking App to open, renew, or close your FD account.
