Top News

• Good news for FD investors
• Interest rate hike by Bank of India
• More returns on fixed deposits

The Reserve Bank of India (RBI) At the repo rate Most banks have consistently reduced fixed deposit (FDA) rates since February 2025, with a total cut of 125 basis points. Bank of India, on the other hand, has hiked interest rates on select medium and long-term deposits. According to an official press release, the state-owned bank has increased FD rates on deposits of 1 to 3 years and below Rs 3 crore from May 18. The move comes at a time when the repo rate has come down to 5.25% as the RBI cut rates, prompting many public and private banks to cut deposit rates to save their profits.

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Bank of India said that senior citizens will get an additional 50 basis points on deposits of 6 months to less than 3 years, while ultra-senior citizens will get an additional 65 basis points. For deposits of 3 years and above, this additional benefit increases to 75 basis points for senior citizens and 90 basis points for super senior citizens.

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The fixed deposit market has been under pressure since the RBI started cutting rates in February 2025. Many private lenders and some public sector banks have reduced returns on fixed deposits, especially 1-3 year fixed deposits, as the impact of the reduced policy rates has gradually spread to other deposit products. Despite this trend, fixed deposits remain a popular option for traditional investors, as they offer protection of capital, expected returns and flexible tenure options. However, experts say that investment decisions should not be based on rates alone.

FD investors should check whether the rate is available only for a specific period, compare callable and non-callable deposits, understand the penalty for premature withdrawal and assess the after-tax returns. Senior citizens should also compare special category benefits, as the difference in rates can be significant. Bank of India is offering an additional 15 basis points on non-callable deposits above Rs 1 crore for a period of at least one year.

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