RBI Jumbo Rate Cut: Should You Invest In Fixed Deposits Now?

FD Interest Rate Cut: The Reserve Bank of India (RBI) has for the third consecutive time slashed the repo rate in this year, making the total deduction to 100 basis points (bps). After the repo rate cut of 50 bps on June 6, 2025, the current repo rate stood at 5.5 per cent. This cut in the repo rate delivers good news for borrowers, however, it's the reverse for fixed deposit (FD) investors. 

On the backs of aggresive rate cuts under RBI Governor Sanjay Malhotra in 2025, several banks have been cutting down their FD interest rate.

The RBI has cut the repo rate by 25 bps each time in February and April 2025.

Reportedly, fisex deposit rates have been reduced in the range of 30-70 bps since February 2025." Along with the cut down in fixed deposit interest rates, banks are also reducing the interest rates on savings bank accounts.

How much FD rate cuts can investors expect in the near future? 

The interest rates on fixed deposits are expected to fall in the upcoming months, however, it may take some time before it actually happens. There are many banks which are still offering FDs at attractive rates.

Therefore, it is essential for FD investors to book FDs at current higher rates as soon as possible. Certain banks are still offering interest rates of 8 per cent or higher for longer-term fixed deposits.

However, as most of the highest interest rates currently available on FDs are being offered by Small Finance Banks so you should check the safety of your principal amount.

If you book your FDs with any bank which is considered risky it will be better to book your FD in such a way that it is covered under Rs 5 lakh deposit insurance cover. Many major banks are currently offering interest rates of 7% or higher for longer-term fixed deposits.

Meanwhile, FD returns are reportedly expected to decline, possibly settling around or below 7 per cent per annum.