Major banks cut lending, deposit rates following RBI’s repo rate cut

Major banks have cut their lending and deposit rates following Reserve Bank of India’s (RBI) 50 basis points cut in repo rate in 2025.

The largest private sector bank HDFC Bank cut its deposit interest rates by 25 basis points. A basis point is one-hundredth of a percentage.

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HDFC Bank announced that savings deposit for accounts with a balance lower than ₹50 lakh will accrue 2.75% and above ₹50 lakh will accrue 3.25% effective April 12 2025. The interest rates are changing for the first time in about three years, when the corresponding rates were 3% and 3.5%.

SBI cut its fixed deposit interest rates for senior citizens. Interest rates for FDs (fixed deposits) that mature between one and three years will now be 20 basis points collectively. FDs with tenure between one and two years will now yield 7.2% from 7.3% and those between two and three-year tenure will now accrue an interest rate of 7.4% from 7.5%, according to SBI’ s website, effective April 15 2025.

Bank of India reduced its FD interest rates for amount of less than ₹3 crore and is now offering 4.25% for deposits maturing between 91 days and 179 days. A rate of 5.75% is given for 180 days to less than one-year deposits. Deposits for one year would get an interest rate of 7.05% while those above 1 year up to 2 years would get 6.75%. For deposits in the bucket of ₹3 crore to less than ₹10 crore, the bank will be offering 5.75% for the funds maturing between 91 days and 179 days, an interest rate of 6.25% is being offered for 180 days to up to 210 days deposit and 6.50% for deposits of 211 days to less than one year, the bank said in a statement.

Banks also reduced their lending rates. State Bank of India, Bank of Maharashtra among others also cut their lending rates. SBI cut repo rate linked lending rates by 25 basis points to 8.25% and external benchmark lending rates to 8.65%. Bank of Maharashtra too announced to cut external benchmark rates to 8.65%.

The cut in both deposit and lending interest rates comes days after the RBI announced a 25-basis point cut in repo rate, the rate at which commercial banks borrow from the central bank. The repo rate at the beginning of the calendar year was 6.5%. After two consecutive cuts, the rates are now at 6%, and the RBI has cited that the retail inflation is well within the target area of 4% and the March inflation is expected to be in line with the target rate.

The change in interest rates comes at a time when the Finance Ministry and the RBI had flagged that households were moving to market-based investing and saving instruments such as mutual funds and were not preferring banks.