Fixed deposit (FD) investors across India have been hit with a surprising update. Bank of India (BoI), one of the country’s oldest public sector banks, has revised its interest rates on fixed deposits effective April 15, 2025. Alongside the rate cut, BoI has also discontinued its popular 400-day special FD scheme, which offered a high interest rate of 7.30%.
This move could significantly affect both retail investors and senior citizens who were relying on the scheme for higher returns. Here’s a detailed guide to help you understand what this means, what has changed, and what your options are going forward.
Bank of India Cuts Interest Rates
| Feature | Details |
|---|---|
| Bank | Bank of India (BoI) |
| Effective Date | April 15, 2025 |
| Discontinued Scheme | 400-day FD @ 7.30% (General) |
| Revised FD Rates | Up to 25 basis points lower |
| 91-179 Days | Reduced from 4.50% to 4.25% |
| 180 Days to <1 Year | Reduced from 6.00% to 5.75% |
| 1 Year | Reduced from 7.00% to 6.80% |
| Above 1 Year to <2 Years | Reduced from 6.80% to 6.75% |
| Senior Citizen Bonus | +0.50% |
| Super Senior Citizen Bonus | +0.65% |
| Official Link | Bank of India FD Rates |
The Bank of India’s FD rate cut and withdrawal of the 400-day scheme is a wake-up call for conservative investors. While BoI still offers moderate returns and strong safety, alternatives like Indian Bank, SBI, and Post Office schemes may offer better yields, especially for senior citizens. Evaluate your financial goals and diversify your investments smartly.
Why Did Bank of India Reduce FD Rates?
The decision to reduce fixed deposit interest rates usually reflects a shift in the bank’s cost of funds and monetary policy trends. With the Reserve Bank of India (RBI) maintaining a neutral stance on repo rates in recent policy reviews, banks are adjusting their deposit and lending rates to balance liquidity.
BoI is not alone in this move. Other banks such as SBI and Indian Bank have also revised their FD offerings in recent months. However, the closure of the high-yield 400-day FD scheme is what makes this move stand out. For context, this scheme offered 7.30% interest for regular customers and up to 7.80% for senior citizens, which was highly competitive.
see also: Banks Also Reduced FD Rates – Know the New Rates of HDFC, ICICI, and SBI
Breakdown of the New FD Interest Rates
General Public Rates (Deposits < ₹3 crore):
- 7 to 14 days: 3.00%
- 15 to 30 days: 3.00%
- 31 to 45 days: 3.25%
- 46 to 90 days: 4.00%
- 91 to 179 days: 4.25% (reduced from 4.50%)
- 180 days to < 1 year: 5.75% (reduced from 6.00%)
- 1 year: 6.80% (reduced from 7.00%)
- Above 1 year to < 2 years: 6.75% (reduced from 6.80%)
Senior Citizens (60+ years):
- Get an additional 0.50% on all tenures.
Super Senior Citizens (80+ years):
- Get an additional 0.65% on all tenures.
Premature Withdrawal Charges
BoI has also clarified its premature withdrawal penalty structure:
- FD < ₹5 lakh:
- 0.50% penalty if withdrawn before 12 months.
- No penalty if withdrawn after 12 months.
- FD ≥ ₹5 lakh:
- 1.00% penalty on premature withdrawal.
If you renew your FD for a longer tenure upon premature withdrawal, no penalty is charged, regardless of the deposit size.
What Does This Mean for Investors?
If you had planned to invest in BoI’s 400-day scheme or already had funds in it, this update matters greatly:
- No new applications for the 400-day FD will be accepted.
- Existing deposits will continue until maturity.
- On maturity, you will need to reinvest at the new, lower rates.
This may lead investors to consider alternatives that offer better returns or government-backed security.
Alternatives for Higher FD Returns in 2025
1. Indian Bank’s “IND SUPER 400 Days” Scheme
- 7.30% (General)
- 7.80% (Senior Citizens)
- 8.05% (Super Senior Citizens)
- Valid for a limited period.
2. SBI’s “Amrit Kalash” FD (444 Days)
This Post Office Scheme Can Make You a Millionaire: Invest Just ₹5,000 per Month – See the Full Calculation
- 7.10% (General)
- 7.60% (Senior Citizens)
- Government-owned bank, higher credibility.
3. Post Office Time Deposits
- Up to 7.5% for 5-year tenure.
- Backed by the Government of India.
4. Senior Citizen Savings Scheme (SCSS)
- 8.2% annual interest.
- Quarterly payouts.
- Suitable for retirement planning.
Expert Tip: Ladder Your FDs
If you’re concerned about falling interest rates, consider FD laddering. This involves splitting your investment into multiple FDs with different maturity dates. That way, all your money isn’t locked in at one rate, and you can reinvest portions when rates rise.
see also: Bank Is Giving the Highest Return on 1-Year FD, You Will Get Profit Up to Rs 23,000
Bank of India Cuts Interest Rates FAQs
1. Will my existing 400-day FD at BoI be affected?
No. Your FD will continue at the agreed interest rate until maturity.
2. Can I still invest in the 400-day scheme?
No. BoI has officially discontinued it for new investors from April 15, 2025.
3. Are senior citizen rates still attractive at BoI?
With the 0.50% bonus, rates remain competitive but lower than other options like SCSS.
4. How can I avoid premature withdrawal penalties?
Only withdraw early if you plan to renew for a longer term. That way, BoI waives the penalty.
5. Are private banks offering better FD rates in 2025?
Yes, some private banks like RBL and Bandhan are offering up to 8%, but with higher risk.
