Mumbai: The Reserve Bank of India (RBI) has cut the repo rate for the third time in 2025. This time, the cut is big — 50 basis points. Now the repo rate is down to 5.5 per cent.
The repo rate is the rate at which RBI lends money to banks. When RBI lowers this rate, banks also reduce the interest on loans. So, home loans, car loans, and personal loans may become cheaper.
This is great news for people who want to take a loan. Their loan EMIs will be lower, and they will save money.
But this news is not good for people who keep their money in Fixed Deposits (FDs) or savings accounts.
After the repo rate cut, banks have also reduced the interest rates on FDs. According to an SBI report, banks have cut FD interest rates by 30 to 70 basis points since February 2025.
For example, if a bank was offering 7 per cent interest on FDs earlier, it is now giving only around 6.3 per cent to 6.7 per cent.
Savings account interest rates have also gone down. Some banks are now giving just 2.70 per cent interest on savings accounts.
This means people who wanted to earn safe and steady returns from FDs or savings accounts will now earn less.
Still, FDs are considered a good option. Even after the cut, they give better returns than savings accounts and keep your money safe.
Senior citizens get extra interest on FDs. This helps them earn regular income without taking any risk.
FDs are also flexible. You can choose the time period — from a few days to several years.
If you want to save tax, there is a 5-year tax-saving FD option too.
In short, while loans have become cheaper, people who depend on FDs or savings for income should now think carefully about where to invest their money.
