RBI MPC repo rate: The Reserve Bank of India's Monetary Policy Committee may go for an interest rate cut on February 7 for the first time in almost five years. During its December meeting, the RBI decided to keep the repo rate steady at 6.5% for the 11th consecutive time due to ongoing inflationary challenges.
However, recent developments have emerged since then. The RBI has infused significant liquidity into the banking system in the past few days, leading some analysts to speculate that a rate cut may be on the horizon, despite inflation levels remaining elevated.
The RBI's repo rate impacts the interest rates banks charge for loans and the rates they set for investments like fixed deposits. It acts as a guide for banks on the interest rates they should offer. When the repo rate is raised, banks increase their fixed deposit rates to attract more depositors. Conversely, a rate cut compels banks to lower their fixed deposit rates.
All this while, when the RBI maintained its interest rate at 6.5%, investors were advised to go for short- to medium-term fixed deposits to maximise returns while taking advantage of the current rate environment.
Rate cut effect on Fixed deposits
A fixed deposit offers a reliable method for preserving liquidity and securing a guaranteed return on the invested capital. Interest rates may differ among different financial institutions.
The RBI last raised the repo rate in June 2023, and since then, it has remained stable at 6.5%. A string of gradual hikes totaling 2.5% until February 2023 led banks to increase FD rates significantly.
However, the repo rate has been held steady for 11 consecutive times, suggesting that interest rates have reached their peak. In anticipation of the upcoming MPC meeting, several banks have adjusted their FD interest rates accordingly.
"With the MPC’s upcoming decision, we are looking forward to a balanced approach that fosters both financial inclusion and investment growth. A potential repo rate cut could make credit more accessible, helping individuals manage liquidity needs. At the same time, maintaining attractive fixed deposit rates is crucial for digital-first investors seeking safe and rewarding savings options. We expect policy measures that strike the right balance—fueling economic expansion while ensuring savers continue to see value in their investments," said Ankur Maheshwari, CFO, Freo - (FD and Investments).
Latest FD rates
Banks offering between 7% and 8%
Public Sector Banks
Bank of Maharashtra – 7.45% (366 days) Central Bank of India – 7.50% (1111 days; 3333 days) Bank of India – 7.30% (400 days) Bank of Baroda – 7.30% (400 days - Bob Utsav) Canara Bank – 7.40% (3 years to less than 5 years) Indian Overseas Bank – 7.30% (444 days) Punjab & Sind Bank – 7.45% (555 days) Union Bank of India – 7.30% (456 days) State Bank of India – 7.25% (444 days - Amrit Vrishti) Indian Bank – 7.30% (400 days - IND SUPER) Top Foreign Banks Offering the Best FD Rates
Small Finance Banks
Unity Small Finance Bank – 9.00% (1001 days) NorthEast Small Finance Bank – 9.00% (18 months 1 day to 36 months) Suryoday Small Finance Bank – 8.60% (5 years) Utkarsh Small Finance Bank – 8.50% (2 years to 3 years; 1500 days) Jana Small Finance Bank – 8.25% (1 year to 3 years) Equitas Small Finance Bank – 8.25% (888 days) Ujjivan Small Finance Bank – 8.25% (12 months) AU Small Finance Bank – 8.10% (18 months) ESAF Small Finance Bank – 8.38% (888 days) Unity Small Finance Bank – 8.15% (1001 days) Private Sector Banks Bandhan Bank – 8.05% (1 year) RBL Bank – 8.00% (500 days) YES Bank – 8.00% (18 months) DBS Bank – 7.50% (376 to 540 days) IndusInd Bank – 7.99% (1 year 5 months to 1 year 6 months) ICICI Bank – 7.25% (15 months to 2 years) HDFC Bank – 7.40% (55 months) IDFC First Bank – 7.90% (400 to 500 days) Axis Bank – 7.25% (15 months to less than 2 years) DCB Bank – 8.05% (19 months to 20 months; above 26 months to less than 61 months) Banks offering 8% and more on bank fixed deposits:
Small Finance Banks
Unity Small Finance Bank – 9.00% (1001 days) NorthEast Small Finance Bank – 9.00% (18 months 1 day to 36 months) Suryoday Small Finance Bank – 8.60% (5 years) ESAF Small Finance Bank – 8.38% (888 days) Jana Small Finance Bank – 8.25% (1 year to 3 years) Equitas Small Finance Bank – 8.25% (888 days) Ujjivan Small Finance Bank – 8.25% (12 months) AU Small Finance Bank – 8.10% (18 months) Utkarsh Small Finance Bank – 8.50% (2 years to 3 years; 1500 days) Private Sector Banks
Bandhan Bank – 8.05% (1 year) RBL Bank – 8.00% (500 days) YES Bank – 8.00% (18 months) IDFC First Bank – 7.90% (400 to 500 days) DBS Bank – 7.50% (376 to 540 days)
Foreign Banks
Deutsche Bank – 8.00% (Above 1 year to 3 years) Public Sector Banks: Central Bank of India – 7.50% (1111 days; 3333 days) Bank of Maharashtra – 7.45% (366 days) Bank of India – 7.30% (400 days) Punjab & Sind Bank – 7.45% (555 days) Canara Bank – 7.40% (3 years to less than 5 years)