The Reserve Bank of India (RBI) cut the repo rate by 25 basis points to 6.25%, marking its first rate cut in five years. This move makes borrowing cheaper but may lead to lower fixed deposit (FD) interest rates.
Conservative investors and retirees who rely on FD interest income might see reduced passive income. Banks may not immediately cut deposit rates, but new investors might face lower rates as banks reprice their deposits.
Leading banks like Bank of Baroda, Indian Bank, and State Bank of India offer special-tenure, higher-rate FD schemes until March 31, 2025. These schemes provide higher interest rates compared to traditional FDs and are suitable for risk-averse investors looking to optimize returns in the short term.
