On June 15, 2025, the State Bank of India (SBI)—the nation’s largest lender—reduced its savings account interest rate to 2.5%, the lowest ever. This change applies to all account balances effective immediately
📉 What Triggered the Cut?
- The move follows the Reserve Bank of India’s (RBI) repo rate cut of 50 basis points
- Term deposit rates also dropped by 25 basis points across various tenures, affecting both new and renewing deposits
🚨 Impact on Customers
- General savers will now earn just 2.5% per annum on deposits, down from 2.7% (and up to 3% for balances above ₹10 crore)
- Senior citizens face lower fixed deposit yields, though rates for longer tenures (e.g. 5–10 years) remain over 7%, albeit reduced .
- FD holders should review current investments, especially those nearing renewal
🔄 Broader Banking Sector Response
- Other major banks like HDFC, ICICI, and Canara Bank have also lowered savings and term deposit rates in response to the RBI’s policy move
- The trend reflects a broader easing cycle in Indian banking aimed at boosting credit growth .
✅ Why You Should Act Now
| Tip | Why It Matters |
|---|---|
| Review deposits | New deposits will now fetch lower returns |
| Lock high rates now | Longer-term FDs still offer >7% for seniors |
| Explore alternatives | Consider bonds, debt funds, or small-bank FDs for better yields |
