India’s largest public sector banks, including State Bank of India (SBI), Punjab National Bank (PNB), and Bank of India (BoI), have announced a reduction in Fixed Deposit (FD) interest rates effective April 2025. This development comes on the heels of the Reserve Bank of India (RBI) cutting the repo rate by 25 basis points to 6%, triggering a ripple effect across interest-bearing savings instruments.
SBI, PNB, BOI Announce FD Interest Rate Cuts
| Feature/Update | Details |
|---|---|
| Repo Rate (RBI – April 2025) | Reduced by 25 bps to 6% |
| SBI FD Rate (1–2 years) | Reduced from 6.80% to 6.70% |
| SBI Special Scheme (Amrit Vrishti – 444 days) | 7.05% for general public, 7.55% for senior citizens |
| BoI 1-year FD Rate | Increased to 7.05%, while other tenures see cuts |
| PNB FD Highest Rate (390-day tenure) | 7.10% |
| Link to SBI FD Rates | SBI Official FD Rates |
| Link to PNB FD Rates | PNB Official FD Rates |
| Link to RBI Repo Rate Info | RBI Official Website |
The April 2025 FD rate cuts by SBI, PNB, and BoI signal a turning point in interest rate trends, reflecting the RBI’s softer monetary stance. While it’s a dampener for risk-averse savers, there are still ways to optimize your returns through special schemes and strategic investments. Make sure to compare, plan ahead, and lock in favourable rates while they last.
Why Are Banks Cutting FD Rates Now?
The trigger for the latest round of FD rate cuts is the monetary policy decision by RBI in April 2025. The central bank lowered the repo rate from 6.25% to 6% to support economic growth amid slowing private investment and weak global cues.
When the RBI cuts the repo rate — the rate at which it lends money to commercial banks — it effectively lowers the cost of funds for banks. In turn, banks reduce their deposit and lending rates to maintain their net interest margins.
see also: Deposit ₹5 Lakhs in Post Office Time Deposit Scheme and Get Guaranteed Returns
SBI FD Interest Rate Cut: What’s Changed?
State Bank of India, India’s largest lender, has revised its FD rates across selected tenures. Here’s a breakdown:
Revised SBI FD Rates (Effective April 15, 2025)
- 1 year to <2 years: Reduced from 6.80% to 6.70%
- 2 years to <3 years: Reduced from 7.00% to 6.90%
- Senior citizens: Get an additional 0.50% on all regular rates
- Super senior citizens (80+): Get 0.75% higher interest rates
SBI’s Special Scheme – Amrit Vrishti (444 days)
SBI has reintroduced its limited-time “Amrit Vrishti FD” with revised interest rates:
- General Public: 7.05%
- Senior Citizens: 7.55%
- Super Senior Citizens: 7.65%
Earlier, the scheme offered up to 7.75% for senior citizens, so this marks a notable reduction.
Bank of India FD Rate Update
Bank of India (BoI), another major PSU bank, has also revised its interest rates across various deposit tenures.
New BoI FD Rates (Effective April 15, 2025)
- 91–179 days: Reduced from 4.50% to 4.25%
- 180 days to <1 year: Reduced from 6.00% to 5.75%
- Exactly 1 year: Increased to 7.05%
- 1–2 years: Slight drop from 6.80% to 6.75%
BoI has also discontinued its 400-day special FD scheme, which earlier offered 7.30% interest.
Punjab National Bank FD Changes
PNB has updated its FD slabs and rates, with minor rate adjustments. The highest rate now available is 7.10% for a 390-day deposit.
Latest PNB FD Interest Rates (as of April 2025)
- 7 days to 10 years: Rates range from 3.50% to 7.10%
- Senior citizens receive an additional 0.50% on all standard rates
PNB has not made large-scale reductions but is aligning itself with overall market sentiment.
What Should FD Investors Do Now?
1. Lock In Higher Rates Now
If your bank hasn’t yet reduced its rates, consider locking in a longer-term FD at current rates.
2. Explore Special FD Schemes
Many banks offer limited-time FD schemes that beat regular interest rates. These can be attractive for short to medium-term investors.
3. Compare Rates Across Banks
Don’t limit yourself to just your primary bank. Use platforms like BankBazaar or Groww to compare FD rates.
4. Consider Laddering Strategy
Split your FD investments across different tenures. This protects you from interest rate volatility.
5. Look at Alternatives
- Post Office Time Deposits: Currently offering up to 7.5%
- Senior Citizens Savings Scheme (SCSS): Up to 8.2%
- RBI Floating Rate Bonds: Currently at 8.05%
see also: Bank FD Interest Rates 2025: These Banks Have Reduced Interest on FDs
SBI, PNB, BOI Announce FD Interest Rate Cuts FAQs
Q1. Why do banks cut FD interest rates?
Banks lower FD rates when the RBI cuts the repo rate to reduce lending costs. This impacts the interest they offer to depositors.
Q2. Are existing FDs affected by the new rates?
No, existing FDs will continue to earn the booked interest until maturity. The new rates apply only to fresh or renewed deposits.
Q3. Which banks still offer high FD rates?
Some small finance banks (like AU SFB, Equitas, or Ujjivan SFB) offer FDs at 8–8.5% but come with slightly higher risk.
Q4. Is it safe to invest in corporate FDs?
Corporate FDs offer higher returns, but carry credit risk. Always check credit ratings and company reputation before investing.
Q5. What’s the tax on FD interest income?
Interest income is fully taxable under the income tax slab you fall into. TDS (10%) is deducted if annual interest exceeds ₹40,000 (₹50,000 for seniors).
