State Bank of India (SBI) has once again reduced the interest rates on fixed deposits (FDs) in the current fiscal year 2025-26. This marks the third instance of the country's largest bank lowering returns on FDs consecutively. The latest cut is of 15 basis points, primarily affecting short-term deposits. These rates have been implemented from July 15, 2025.
Earlier, in June 2025, SBI had reduced the interest on savings deposits to 2.5 percent. This recent move makes it clear that the bank is adopting a defensive stance on interest rates, especially as liquidity increases in the market and the Reserve Bank of India (RBI) continuously reduces the repo rate.
What are the new rates on FDs for regular customers?
SBI has published the information about the new interest rates on its website. The new interest rates of the bank are specifically applicable to FDs ranging from 46 days to 1 year.
- Interest on FDs for 46 to 179 days will now be 4.90 percent instead of 5.05 percent.
- Interest on FDs for 180 to 210 days has been reduced from 5.80 percent to 5.65 percent.
- The interest rate on deposits for 211 days to 1 year has decreased from 6.05 percent to 5.90 percent.
- However, the interest rate on deposits for a period of 7 to 45 days remains unchanged at 3.05 percent.
Senior citizens also did not get any relief
Interest rates on short-term FDs have also been reduced for senior citizen customers.
- Interest on FDs for 46 to 179 days will now be 5.40 percent instead of 5.55 percent.
- Interest on FDs for 180 to 210 days has been reduced from 6.30 percent to 6.15 percent.
- The interest rate on deposits for 211 days to 1 year has been reduced from 6.55 percent to 6.40 percent.
- However, the interest rate on FDs for 7 to 45 days will remain at 3.05 percent.
No change on FDs of more than 1 year
SBI has maintained the interest rates on FDs of more than 1 year and up to 10 years at the same levels as before. This means that there is no change in interest rates for those investing in long-term FDs.
The bank is offering 6.05 percent to regular customers and 7.05 percent (including an additional 0.50% interest under the SBI Wecare scheme) to senior citizens on the 5-year tax-saving FD.
Interest rates reduced but the bank's earnings increased
SBI's recent financial figures show that net interest income has increased, but there is pressure on margins.
- In the fourth quarter of fiscal year 2024-25, the bank's net interest margin (NIM) decreased to 3.22 percent.
- However, the Net Interest Income (NII) increased year-on-year and reached ₹42,775 crore.
- There was also an improvement of 3.21 percent on a quarterly basis.
RBI's rates decreased, so SBI also showed an effect
RBI has also cut the repo rate on three consecutive occasions.
- 0.25 percent in February 2025
- 0.25 percent in April 2025
- 0.50 percent in June 2025
The repo rate has now decreased to 5.50 percent. Along with this, the Reserve Bank has also reduced the Cash Reserve Ratio (CRR) from 4 percent to 3 percent. All this is being done to increase liquidity in the market to accelerate economic activities.
Impact on FD customers' pockets, but relief for the bank
This time, the interest rate cut will directly affect the earnings of FD investors. Those who invest in short-term FDs, in particular, will now receive less interest than before.
On the other hand, this step will help the bank in reducing its funding costs. At a time when credit growth is fast and the demand for loans is increasing, the bank is trying to improve its margins by reducing interest on its deposit schemes.
