Winning Bizness Desk
Mumbai. The recent cut in the Reserve Bank of India’s repo rate is now reflecting in bank deposit rates, with the country’s largest lender, State Bank of India, lowering interest on select fixed deposits. SBI has announced a reduction in FD rates across specific tenures, including its popular special deposit scheme Amrit Vrishti. The move signals the beginning of a softer interest rate cycle, where banks gradually discourage high-cost deposits as borrowing from RBI becomes cheaper. The revised rates will come into effect from December 15 and will directly impact new investors and renewals.
Amrit Vrishti scheme returns see cut
SBI has reduced interest rates on its special 444-day fixed deposit scheme, Amrit Vrishti, by 0.15 percentage points. Under the revised structure, general customers will now earn 6.45 percent annual interest on deposits made under this scheme. Senior citizens, who receive additional benefits, will earn 6.95 percent per annum. This scheme had gained popularity due to its higher-than-average returns for a short-to-medium tenure, but the latest revision slightly reduces its appeal compared to earlier offerings.
Other FD tenures also revised
Apart from Amrit Vrishti, SBI has also cut rates on fixed deposits with tenures ranging from two years to less than three years. These deposits will now fetch 6.40 percent interest, down from the earlier 6.45 percent. The reduction is marginal at 0.05 percent, but it reflects a broader recalibration of deposit rates across the banking system following the repo rate cut.
Key changes announced by SBI include
- 0.15 percent cut in Amrit Vrishti FD rates
- New rate of 6.45 percent for 444-day deposits
- Senior citizens to earn 6.95 percent on Amrit Vrishti
- 0.05 percent cut for FDs between two and three years
- Revised rates effective from December 15
WeCare scheme remains attractive for seniors
SBI has not made any changes to its WeCare Deposit scheme, which continues to offer higher returns for senior citizens. Under this special scheme, senior citizens earn an additional 0.50 percent interest on fixed deposits with tenures below five years compared to regular customers. For deposits of five years or more, the additional benefit rises to 1 percent. At present, senior citizens investing in FDs of five years or longer under WeCare can earn up to 7.05 percent annually, making it one of the most attractive options in a falling rate environment.
Why repo rate cuts impact FD returns
When the RBI reduces the repo rate, banks can borrow funds from the central bank at a lower cost. Earlier, banks paid around 5.5 percent, which has now dropped to 5.25 percent. As borrowing becomes cheaper, banks have less incentive to attract public deposits by offering high interest rates on FDs. This usually leads to a gradual reduction in deposit rates across banks, especially on short- and medium-term deposits.
Understanding fixed deposits for investors
Fixed deposits remain a preferred investment option due to safety and assured returns. Some key features investors should keep in mind are
- Interest rates are fixed at the time of investment
- Tenure can range from 7 days to 10 years
- Deposits up to Rs 5 lakh are insured in India
- Premature withdrawal is allowed with penalty
- Five-year tax-saving FDs qualify for Section 80C benefits
As interest rates soften, depositors may need to balance safety with returns, especially when choosing tenures and special schemes in the current cycle.
