Punjab National Bank, Canara, Shivalik, Kotak Mahindra realign FD rates amid RBI repo rate reduction

Punjab National Bank (PNB) has revised its fixed deposit (FD) interest rates on select tenures for balances below Rs 3 crore, in response to similar actions by other financial institutions. The bank now offers rates ranging from 3.50% to 7.10% for tenures spanning 7 days to 10 years. The highest interest rate of 7.10% applies to a 390-day tenure. Senior citizens are entitled to an additional 50 basis points (bps) for deposits up to 5 years and 80 bps for longer terms, while super senior citizens benefit from an 80 bps premium across all maturities.

Shivalik Small Finance Bank has reduced its FD interest rates by up to 25 basis points for amounts below Rs 3 crore. The new rates range from 3.50% to 8.30% for general citizens and 4% to 8.80% for senior citizens. The highest rate for senior citizens has decreased from 9.05% to 8.80%. Shivalik imposes a 1% penalty on interest earned during the deposit term for premature withdrawals, rather than the contracted rate.

The Reserve Bank of India's recent 25 basis point reduction in the repo rate has prompted several banks, including Kotak Mahindra and Canara, to realign their FD offerings. Kotak Mahindra Bank has decreased FD rates by 15 basis points for certain tenures, now offering between 2.75% and 7.30% for general citizens. Canara Bank's revised rates range from 4% to 7.25% for the general public. Both banks charge a 1.00% penalty for early withdrawal on specified deposits.

Kotak Mahindra Bank's adjustment is part of an industry-wide response to the RBI's monetary easing, aimed at maintaining favourable liquidity conditions. Canara Bank has cut its rates by up to 20 basis points for certain durations. The bank offers a 7.25% interest rate on 444-day deposits and emphasises additional benefits for older customers: "Additional interest of 0.50% for Senior Citizens is available for Deposits (Other than NRO/NRE and CGA Deposits) less than Rs. 3 Cr and with the tenor of 180 Days and above."

These rate reductions reflect the sector's efforts to align with central bank policies while remaining competitive. The adjustments across major banks indicate a strategic shift towards stabilising deposit structures amid fluctuating market rates. The comprehensive revisions aim to balance depositor appeal with economic conditions, underscoring the banking sector's adaptive strategies.