The decision to maintain status quo comes at a time when bond yields, inflation expectations and systemic liquidity conditions are evolving in a manner that could prompt banks to offer relatively higher returns to savers in the coming months.
Market data suggests that the benchmark 10-year government security yield has hardened, while money market rates have also firmed up.
Elevated credit growth relative to deposit mobilisation has further tightened funding conditions for banks, increasing the need to attract deposits through more competitive rates.
According to Puneet Pal, Head–Fixed Income at PGIM India Mutual Fund, the past month saw a sharp selloff in bonds, with yields rising across the curve despite significant open market operations by the RBI. Money market instruments, including certificates of deposit, also saw yields climb 30-40 basis points, reflecting tighter liquidity conditions and weak bond market sentiment.
He noted that inflation, while currently moderate, faces upside risks due to elevated crude oil and fertiliser prices amid ongoing geopolitical tensions.
This has complicated the growth-inflation trade-off and led market participants to factor in a relatively tighter policy trajectory going forward.
The interplay of these factors is relevant for deposit rates.
As banks face a higher credit-deposit ratio—with credit growth outpacing deposit growth—they may increasingly rely on retail deposits to fund lending, which could translate into higher FD rates.
Industry participants have indicated similar trends.
Adhil Shetty, CEO of BankBazaar, said select private banks are currently offering FD rates of up to 7.4%, with most others in the 7–7.2% range. Senior citizens continue to receive an additional 25–50 basis points.
“The rate trajectory from here is genuinely uncertain… Depositors would be well-advised to lock in at current levels rather than assume rates will stay where they are,” he said, adding that laddering investments across tenures can help manage reinvestment risk.
| Bank | Interest Rates for General Public (p.a) | Interest Rates for Senior Citizens (p.a) |
| Axis Bank | 3.00% – 6.45% | 3.50% – 7.35% |
| Bandhan Bank | 2.95% – 7.25% | 3.70% – 7.75% |
| Bank of Baroda | 3.50% – 6.45% | 4.00% – 7.00% |
| Central Bank of India | 3.00% – 6.25% | 3.50% – 6.75% |
| HDFC Bank | 2.75% – 6.25% | 3.25% – 6.75% |
| ICICI Bank | 2.75% – 6.50% | 3.25% – 7.10% |
| IDBI Bank | 3.00% – 6.50% | 3.50% – 7.00% |
| IDFC FIRST Bank | 3.00% – 7.20% | 3.50% – 7.70% |
| IndusInd Bank | 3.25% – 7.00% | 3.75% – 7.50% |
(Source: Bankbazaar)
Echoing the broader trend, Saurabh Jain, Co-founder and CEO of Stable Money, said the RBI’s decision provides stability amid global uncertainty and is reinforcing investor preference for predictable return instruments.
“We are already seeing investors lean towards safer avenues like fixed deposits and bonds, as they look for predictable and stable returns,” he said, adding that the current environment may support higher allocation towards fixed income.
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The macro backdrop also remains a key factor.
The rupee has faced pressure amid global volatility, while foreign portfolio outflows and elevated oil prices continue to influence domestic markets.
At the same time, small savings schemes such as PPF and SCSS are offering relatively attractive rates, requiring banks to remain competitive on deposits.
Taken together, while the RBI’s pause keeps policy rates unchanged, evolving market conditions could have a bearing on deposit rates in the near term.
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