Last Chance to Lock Your FD at Higher Rates – What Investors Should Know After RBI Rate Cut

The Reserve Bank of India (RBI) has slashed the repo rate by a sharp 50 basis points, bringing it down to 5.5%, marking the third consecutive rate cut this year. In a double surprise, the RBI also reduced the Cash Reserve Ratio (CRR) by 100 basis points in four tranches, starting September 2025. While this move aims to boost economic growth, it’s bad news for fixed deposit (FD) investors, as interest rates on deposits are expected to decline soon.

Why FD Investors Should Act Now

If you rely on FDs for stable returns, this could be your last chance in 2025 to lock your funds at higher rates. Following an RBI rate cut, banks typically revise their deposit and lending rates — though not immediately — giving a brief window of opportunity for savvy investors.

Currently, many top banks still offer FD interest rates between 6.5% and 7.25% for tenures of five years or more. But in a falling rate environment, new FDs will fetch lower returns, and even maturing FDs may need to be reinvested at reduced rates.

“If you're planning to invest in FDs or have a maturing deposit soon, now is the time to lock in the higher rates before they disappear,” said a senior banker.

What You Can Do Right Now

✅ Lock in Long-Term FDs

If your bank is offering 7% or more for 3- to 5-year deposits, consider securing that rate for a portion of your savings. Long-term FDs help safeguard returns as rates trend downward.

✅ Use FD Laddering

Instead of putting all your money into one FD, split it across different maturities — like 1, 2, 3, and 5 years. This strategy, called laddering, keeps some funds flexible and allows reinvestment at better rates if the cycle turns.

✅ Check for Senior Citizen Benefits

Senior citizens continue to get an additional 0.50% interest on FDs. If you’re eligible, take full advantage of this extra cushion before overall rates decline further.

How the CRR Cut Affects You

In addition to the repo rate cut, the RBI's 100-bps CRR reduction — rolled out in four steps — will infuse ₹2.5 lakh crore into the banking system. This move is expected to ease liquidity, especially at the short end of the bond market.

Investment Tip:

Marzban Irani, CIO – Fixed Income at LIC Mutual Fund, suggests investing in short-term debt instruments.

“The CRR cut will significantly reduce yields at the shorter end. We recommend 3-month to 3-year bond schemes to make the most of this move,” he said.

Summary

The latest RBI rate actions are aimed at supporting growth, but they signal a lower interest rate regime ahead. For FD investors, this could truly be the final window to secure high returns in 2025. Whether through long-term FDs, laddering strategies, or short-duration bond funds, the time to act is now.

Disclaimer:

Investment decisions should be made with professional guidance. The views expressed by experts quoted in this article are personal and do not reflect those of News18.com or its management.