SBI Tweaks FD Rates Down by 20 bps from May 16 – Depositors to See Slimmer Returns from India’s Banking Giant
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India’s largest public sector lender, the State Bank of India (SBI), has once again revised its fixed deposit (FD) interest rates, slashing them by 20 basis points (bps) across all tenures for both the general public and senior citizens, effective May 16, 2025. This marks the second rate cut in the current financial year—the first being on April 15, when SBI reduced deposit rates by up to 25 bps. The decision follows the Reserve Bank of India’s (RBI) 25 bps repo rate cut in April and anticipates a further rate cut expected in June.
What Are the Latest SBI FD Interest Rates?
| Category | Tenure/Scheme | Previous Rate | Revised Rate |
|---|---|---|---|
| General Public | 7–45 days | 3.5% | 3.3% |
| 5–10 years | 6.5% | 6.3% | |
| Senior Citizens | 5–10 years | 7.5% | 7.3% |
| Callable FDs (₹1.01 Cr – ₹3 Cr) | 1-year – General Public | — | 6.8% |
| 1-year – Senior Citizens | — | 7.3% | |
| 2-year – General Public | — | 7.1% | |
| 2-year – Senior Citizens | — | 7.6% | |
| Amrit Vrishti (444-day scheme) | — | 7.05% | 6.85% |
| Super Senior Citizens | — | 10 bps extra over senior citizen rate | Unchanged |
Super senior citizens will continue to receive an additional 10 bps over and above the senior citizen rates.
Exclusions: These revisions do not apply to Recurring Deposits (RDs), Multi Option Deposit Schemes (MODS), or Green Rupee Term Deposits.
Why Did SBI Slash FD Rates?
The rate cut aligns with the Reserve Bank of India’s monetary policy to infuse liquidity and bring down the cost of capital. In April 2025, the RBI injected nearly ₹5 lakh crore into the financial system, aiming to make borrowing cheaper for individuals and businesses alike.
With borrowing costs lowered, banks are also adjusting their cost of deposits, and SBI’s move is expected to trigger similar revisions by other major lenders. HDFC Bank had already slashed FD rates earlier, and now SBI follows suit, sending clear signals about the banking sector’s direction.
How Will This Impact Fixed Deposit Investors?
For depositors relying on FDs as a stable source of income, especially retirees and conservative investors, the reduction in interest rates means lower returns. With the 5–10 year FD now yielding just 6.3% for the general public and 7.3% for senior citizens, individuals may start exploring alternative low-risk investments like government bonds, debt mutual funds, or even hybrid funds.
Investors should also consider laddering their FDs to optimize returns across different tenures and schemes.
What This Means for Borrowers: Loans to Get Cheaper
As SBI and other banks reduce their cost of deposits, their Marginal Cost of Funds Based Lending Rates (MCLR) are also expected to fall. This can bring down the effective interest rates on various credit products including:
- Home Loans
- Car Loans
- Education Loans
- Personal Loans
With SBI already revising its home loan interest rates, other banks may soon follow. This presents an excellent opportunity for new borrowers and those looking to refinance existing loans at lower interest rates.
How SBI’s Rate Cut Could Push Private Banks to Lower Home Loan Rates
SBI’s recent rate cut is likely to trigger a chain reaction in the banking sector, with private banks expected to follow by lowering their own deposit and lending rates, especially for home loans. To stay competitive, these lenders may offer more attractive loan terms, making home loans cheaper and more accessible. This move not only benefits new buyers and balance transfer seekers but also supports the RBI’s broader liquidity strategy, signaling a market-wide shift toward lower borrowing costs.
Loan Bazaar’s Take: Why Now Is the Best Time to Avail Business and Working Capital Loans
At Loan Bazaar, we view SBI’s latest FD rate cut—and the broader trend of easing interest rates–as a strategic opportunity for India’s MSMEs and SMEs. While depositors may see slimmer returns, businesses stand to gain significantly from reduced borrowing costs. As banks adjust lending rates downward, business loans and working capital solutions are becoming more accessible and affordable.
This shift is particularly beneficial for businesses looking to optimize cash flow, manage seasonal demand, or fund expansion without straining their finances. Lower interest rates can reduce EMI burdens, improve liquidity, and enable faster scaling.
Now is the ideal time for enterprises to rethink their funding strategies and tap into cost-effective financial products. Whether you’re planning to invest in infrastructure, inventory, or digital transformation, Loan Bazaar connects you to tailored business loan options designed to support sustainable growth. Stay informed with us for real-time updates, rate comparisons, and expert guidance that empowers your business decisions.