The Reserve Bank of India (RBI) recently cut the repo rate by 50 basis points, bringing it down to 5.50% on June 6, 2025. This move, the third consecutive rate cut this year, has prompted several banks to revise their fixed deposit (FD) rates. Following suit, major private sector banks like ICICI Bank, Kotak Mahindra Bank, and HDFC Bank have announced their revised FD rates, impacting both general citizens and senior citizens.
Impact of the Repo Rate Cut
The repo rate is the interest rate at which the RBI lends money to commercial banks. A cut in the repo rate generally leads to lower borrowing costs for banks, which in turn, can translate to reduced interest rates on loans and fixed deposits. The RBI's decision to cut the repo rate is aimed at stimulating economic growth by encouraging borrowing and investment. However, this also means that returns on traditional savings instruments like FDs are likely to decrease.
ICICI Bank FD Rates
ICICI Bank has reduced its FD interest rates by up to 25 basis points on select tenures for amounts below Rs 3 crore, effective June 9, 2025. The bank now offers FD interest rates between 3% and 6.6% to general citizens and between 3.5% and 7.1% to senior citizens. The highest interest rate of 6.6% for the general public and 7.1% for senior citizens is offered on tenures from 2 years 1 day to 5 years.
Here’s a quick comparison of ICICI Bank's revised FD rates for different tenures for deposits below Rs 3 crore:
Kotak Mahindra Bank FD Rates
Kotak Mahindra Bank has also revised its FD rates, with the updated rates effective from June 9, 2025. The bank now offers FD interest rates between 2.75% and 6.6% for general citizens and 3.25% and 7.1% for senior citizens for amounts less than Rs 3 crore. The highest rate is offered for the tenure of 391 days to 23 months.
Key highlights of Kotak Mahindra Bank's revised FD rates:
HDFC Bank FD Rates
HDFC Bank has reduced its FD rates by up to 25 basis points for deposits under ₹3 crore, effective June 10, 2025. The bank now offers FD rates ranging from 2.75% to 6.60% per annum for general citizens and 3.25% to 7.10% for senior citizens.
A comparison of HDFC Bank's revised FD rates is as follows:
HDFC Bank has also revised its savings account interest rates, introducing a flat rate structure across all balance tiers. Effective June 10, 2025, all savings account holders will earn a uniform interest rate of 2.75% per annum.
Impact on Depositors
The reduction in FD rates by these major banks will likely impact depositors, especially senior citizens who rely on fixed deposits for a steady income. Investors may need to re-evaluate their investment strategies and consider alternative investment options to maintain their desired returns.
Conclusion
The RBI's repo rate cut has triggered a series of revisions in FD rates by major banks like ICICI Bank, Kotak Mahindra Bank, and HDFC Bank. While this move is expected to boost economic growth by encouraging borrowing, it also means that depositors will earn lower returns on their fixed deposits. Investors should carefully assess the revised rates and explore other investment avenues to optimize their returns in the current economic scenario.
