Following the Reserve Bank of India’s reduction of its benchmark policy rate, the State Bank of India (SBI) responded by decreasing both lending and fixed deposit (FD) rates. Commencing on April 15, 2025, these alterations will assist borrowers while fixed deposit holders might experience marginally diminished returns.
The lending rates at SBI experience a downward adjustment.
State Bank of India reduced its Repo-Linked Lending Rate (RLLR) by 25 basis points to reach 8. 25%. The External Benchmark Based Lending Rate (EBLR) has been reduced to 8. 65%, reflecting the same reduction.
These modifications render various loans including home, car, and personal loans more accessible for new applicants and current borrowers with adjustable rates. Amid global trade uncertainties and economic headwinds the move seeks to enhance credit growth.
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The Importance of This Cut
Through its second successive rate reduction, the RBI seeks to bolster economic performance. SBI’s move to transfer policy rate cut benefits is projected to boost consumer spending together with credit demand.
The financial institutions adjusted fixed deposit interest rates to lower values.
Borrowers celebrate reduced lending rates while FD investors face the necessity to adjust their expectations. SBI has modified its retail fixed deposit interest rates for amounts up to ₹3 crore in the following manner:
- 1 to 2 years: Reduced by 10 bps to 6.70%
- 2 to less than 3 years: Now at 6.90%, down from 7%
For bulk deposits (above ₹3 crore), the reductions are slightly steeper:
- 180 to 210 days: Cut by 20 bps to 6.40%
- 211 days to < 1 year: Down by 25 bps to 6.50%
- 1 to 2 years: Now at 6.80%, down from 7%
- 2 to 3 years: Slashed to 6.75%, also down from 7%
Special Schemes See Adjustments Too
SBI’s Green Rupee Term Deposit, offered in tenors of 1111, 1777, and 2222 days, will now earn 10 bps below the standard card rate.
The popular ‘Amrit Vrishti’ 444-day FD will now offer 7.05% interest from April 15. Senior citizens will get 7.55%, while super senior citizens will benefit from a slightly higher rate of 7.65%.
HDFC Bank and Bank of India Also Join the Rate-Cut Trend
It’s not just SBI reacting to the RBI’s move. HDFC Bank has trimmed its savings account interest rate by 25 bps, bringing it down to 2.75%—the lowest among major private sector banks. For customers with balances above ₹50 lakh, the rate is now 3.25%, down from 3.5%. These changes took effect from April 12, 2025.
In parallel, Bank of India (BoI) has withdrawn its high-yield 400-day special deposit scheme which previously offered 7.3%. BoI also announced a 25 bps reduction across several retail loans:
- Home loans are now offered at a reduced rate of 7.9% p.a., subject to CIBIL score.
- Other products including car loans, personal loans, loans against property, education loans, and even the Star Reverse Mortgage Loan have seen similar cuts.
How Does This Impact You?
- If you’re planning to borrow – This is a good time to consider a loan. With benchmark-linked rates lowered, your EMIs may go down if you have a floating-rate loan, or you could lock in better terms as a new borrower.
- If you’re investing in FDs – Returns are now marginally lower, so you might want to consider other fixed-income options or diversify into mutual funds and bonds if you seek higher returns.
Bottom Line
The rate cuts by SBI and other major banks are a clear signal that the banking sector is aligning with the RBI’s monetary easing strategy. While it’s a win for borrowers, FD investors may want to explore more tax-efficient or inflation-beating alternatives to make the most of their idle funds. check our all Financial Tools
