New Delhi, June 16, 2025 – If you've been relying on your Fixed Deposits (FDs) or savings accounts to grow your earnings, there's some important news you can’t afford to miss. State Bank of India (SBI), the country’s largest public sector bank, has reduced interest rates on both FDs and savings accounts, a move that could significantly impact millions of account holders, especially retirees and fixed-income investors.

This revision follows closely on the heels of the Reserve Bank of India (RBI) reducing the repo rate by 50 basis points, triggering a ripple effect on deposit returns and lending rates across major financial institutions.

📉 SBI Slashes Savings Account Interest to 2.5%

Starting June 15, 2025, SBI has implemented a uniform 2.5% interest rate on all savings bank accounts—regardless of balance size. Previously, customers with balances below ₹10 crore earned 2.7%, while those with balances above ₹10 crore earned 3%.

Now, whether you have ₹10,000 or ₹10 crore in your savings account, you'll earn only 2.5% annually.

🏦 Lower Returns on FDs—Especially for Senior Citizens

SBI has also cut interest rates on Fixed Deposits below ₹3 crore, reducing them by up to 25 basis points across various tenures. Here's a breakdown of the new rates:

This move is particularly concerning for senior citizens, many of whom rely on FD interest as a primary source of income. With rates dropping across tenures, monthly interest payouts will shrink, potentially tightening household budgets for fixed-income retirees.

💸 Why This Rate Cut Matters

For someone investing ₹10 lakh in a 2-year FD, the drop from 6.7% to 6.45% means a loss of approximately ₹5,000 over the term. While that might not seem massive to all, for retirees and conservative investors, every rupee counts, especially in an inflationary environment.

Additionally, as more investors lose confidence in traditional deposit products, this could lead to a shift towards mutual funds, senior citizen savings schemes, or corporate FDs, which often offer higher returns—though usually with higher risk.

🏠 Loans to Get Cheaper with EBLR Cut

On the brighter side, SBI has also announced a 50 basis point reduction in its External Benchmark Lending Rate (EBLR), bringing home loan interest rates down to a range of 7.5%–8.45%. This makes EMIs cheaper for borrowers, especially those with floating rate home loans.

The RBI’s recent move to slash the repo rate to 5.5% marks the third rate cut this year, with previous cuts of 25 basis points each in February and April.

🏦 Other Banks Follow Suit

SBI isn’t alone. Several other public sector banks, including Canara Bank, Union Bank of India, Bank of Maharashtra, and Indian Overseas Bank, have also revised interest rates downward.

Bank of Baroda cut its MCLR by 5 basis points and adjusted FD rates accordingly. Meanwhile, HDFC Bank and ICICI Bank had previously reduced interest on deposits under ₹3 crore.

These changes could impact not just retired individuals, but also middle-class households that rely on interest income to manage their monthly finances.

✅ Key Takeaways:

• SBI now offers 2.5% interest on all savings accounts, down from up to 3%.

• FD rates have been reduced by 20–25 basis points across tenures.

• Senior citizens will feel the most significant impact due to reduced monthly earnings.

• Home loans and other borrowings become cheaper, offering relief to borrowers.

• Other major banks are also cutting interest rates in line with SBI and RBI decisions.