RBI repo rate cut triggers FD rate reductions at Kotak Mahindra, Canara Banks; check details

The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, a move that has led to several banks, including Kotak Mahindra Bank and Canara Bank, adjusting their fixed deposit rates. Effective from April 9, 2025, Kotak Mahindra Bank has lowered its fixed deposit rates by 15 basis points for specific tenures. The revised rates now range from 2.75% to 7.30% for general citizens and from 3.25% to 7.80% for senior citizens. This rate adjustment reflects the second rate cut by the RBI in recent times, intended to maintain favourable liquidity conditions in the banking sector.

Kotak Mahindra Bank's specific interest rate reductions include a 15 basis point cut for the 390-day tenure, reducing the rate from 7.40% to 7.25%. Additionally, the rates for tenures between 391 days and 23 months have been reduced by 10 basis points, from 7.40% to 7.30%. These adjustments are part of the bank’s strategy to align deposit rates with the RBI's softer interest rate outlook. Kotak Mahindra Bank now provides a broad range of rates on deposits below Rs 3 crore, with different slabs for senior citizens.

Canara Bank has also revised its fixed deposit rates following the RBI's announcement, reducing interest rates by up to 20 basis points on certain tenures for deposits below Rs 3 crore. With changes effective from April 10, 2025, Canara Bank now offers interest rates between 4% and 7.25% for the general public, and between 4% and 7.75% for senior citizens on callable deposits. The bank has decreased the FD interest rate from 6.25% to 6.15% for term deposits maturing between 180 and 269 days, indicating its response to the central bank's monetary policy adjustments.

Deposits maturing in 444 days at Canara Bank will now attract a 7.25% interest rate. The bank emphasises additional interest benefits for senior citizens, stating: "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." This policy is aligned with market trends to enhance competitive offerings for an ageing population that prefers risk-free investments like 'fixed deposits'.

Both banks have set penalties for premature withdrawals. Kotak Mahindra Bank imposes a penalty of 1.00% for premature withdrawal on deposits greater than or equal to 365 days, while Canara Bank also charges a 1.00% penalty for premature closure or partial withdrawal of domestic or NRO term deposits below ₹3 crore, reinforcing their commitment to maintaining stable deposit structures amidst fluctuating market rates.