SBI Trims Fixed Deposit Rates by 0.20%. Should You Rethink Your Investments?

State Bank of India (SBI) has lowered its fixed deposit (FD) interest rates by 20 basis points (0.20%) across all tenure periods. This means new fixed deposits will earn slightly less interest than before, no matter how long you invest.

It is to be mentioned that a fixed deposit (FD), also known as a term deposit or time deposit, is an investment where you deposit a lump sum of money for a fixed period at a predetermined interest rate. Banks and non-banking financial companies (NBFCs) offer FDs, providing a way to grow your savings with guaranteed returns. A basis point is 0.01%, so a 20-basis point cut means an interest rate that was 6.50% will now be 6.30%.

Also Read: SBI Q4 Results 2025: PAT Declines 9.9%, Dividend Of Rs 15.90 Declared; Plans To Raise Rs 25,000 Cr In FY26 - Details | Republic World

Why did SBI cut interest rates?

Banks adjust FD rates based on the broader economy and decisions by the Reserve Bank of India (RBI). When the RBI cuts its key rates or overall market interest rates drop, banks follow suit. Lower rates help banks reduce their borrowing costs and offer cheaper loans to customers.

How does it impact customers?

For investors, this change means lower returns on any new fixed deposits opened. This will particularly impact those who depend on FDs for a steady income stream. However, existing fixed deposits will continue to earn the interest rate agreed upon at the time of investment until they mature.

What could be the likely implications?

With FD rates falling, many investors might look beyond traditional fixed deposits and explore other investment options such as mutual funds or bonds that may offer higher returns, though these alternatives usually come with greater risks. Additionally, if inflation remains higher than the FD interest rates, the real purchasing power of your savings could decline over time.