SBI Slashes Fixed Deposit Rates By 20 BPS
Senior citizens and super senior citizens (aged 80 and above) will continue to receive additional interest rate benefits, consistent with the bank’s existing policy for these categories.
State Bank of India (SBI), the country’s largest public sector lender, announced a cut in fixed deposit (FD) interest rates by up to 20 basis points across various tenors, effective from 16 May 2025, as per its official website. This decision aligns with the Reserve Bank of India’s recent repo rate cut of 25 basis points, its second consecutive rate reduction, aimed at stimulating economic growth amidst pressure from US-imposed reciprocal tariffs.
The rate cut affects retail domestic term deposits under Rs 3 crore, applicable to both general and senior citizens.
Revised Interest Rate Structure (Effective 16 May 2025):
- 2 years to <3 years: 6.70 per cent (highest among tenors)
Senior citizens and super senior citizens (aged 80 and above) will continue to receive additional interest rate benefits, consistent with the bank’s existing policy for these categories.
Rationale Behind the Move:
The interest rate cut is a response to the RBI’s easing stance, with the repo rate now standing at 6 per cent, according to the central bank’s April 2025 monetary policy announcement. The move reflects efforts to counterbalance external trade pressures and stimulate domestic economic activity.
Last month, SBI had already implemented a similar rate reduction between 10 to 25 basis points, following RBI’s policy shift.
Market Reaction:
SBI’s stock price on the Bombay Stock Exchange (BSE) rose marginally following the announcement, trading at Rs 793.95, up 0.27 per cent from its previous close.
Fixed deposit rates have gradually been trending lower in response to the RBI’s liquidity-infusion strategies and broader macroeconomic objectives. According to Bloomberg and Business Standard reports, India’s banking sector is currently focused on stimulating lending over saving, in a bid to revive investment and consumption.
SBI’s back-to-back rate reductions indicate a broader strategy aligning with monetary policy goals, but they also dampen returns for conservative savers, especially amid rising inflationary concerns.