Will FD Rates Rise After the RBI's Repo Hike? What SBI Says, What Has Changed, and How to Plan Your Deposits

• Most big banks have not yet raised FD rates after the hike.
• SBI's chairman, C. S. Setty, said he does not expect deposit rates to change for the next two to three months, because banks have enough money.
• Bajaj Finance, a non-bank lender, raised its FD rates by 0.15 to 0.40 percentage points from October 7.
• Small finance banks continue to offer the highest rates, but with somewhat higher risk.
• Your deposits in any bank are insured up to ₹5 lakh per bank by the DICGC.

Why loan rates rose but deposit rates did not

More than half of all bank loans are now linked to an external benchmark such as the repo rate, Setty noted, so they reprice automatically when the RBI acts. Deposit rates are different. Banks raise them only when they need more money from savers.

At the moment, Setty said, "we have sufficient liquidity in the system", meaning banks have plenty of deposits relative to the loans they are making. Until that changes, they have little reason to pay savers more. If loan demand keeps growing strongly, banks may need to compete for deposits, and rates could then rise.

Current FD rates at big lenders

According to Goodreturns, on the day of the hike:

• SBI: 3.05% to 6.40% for general customers, and 3.55% to 7.05% for senior citizens, depending on the tenure.
• HDFC Bank: 2.75% to 6.50%, and 3.25% to 7.10% for senior citizens.
• ICICI Bank: 6.50% on longer tenures of three to ten years, and 7.00% to 7.10% for senior citizens on those tenures.
• Bajaj Finance (after its October 7 hike): up to 7.75% for general customers on 31 to 60 months, and up to 8.15% for senior citizens.

Rates change often, so always check the bank's own website before you invest. Small finance banks were offering roughly 5.75% to 8.25%, according to GoPocket.

Should you lock in now or wait?

Nobody can predict rates exactly, but a few principles help.

• If you need the money on a fixed date (a child's fees, a wedding, a planned purchase), choose an FD that matures just before that date, at the best rate available now. Don't gamble on small rate changes.
• If you are investing for several years, consider spreading your money instead of putting it all in at once. Saurabh Jain of Stable Money suggested gradually locking in rates rather than waiting to catch the peak, and noted that another RBI hike is widely expected in December.
• Senior citizens usually earn 0.50 percentage points or so more, so compare carefully between banks.

A simple strategy: build an FD ladder

An FD ladder means splitting your money into several deposits that mature at different times. For example, instead of putting ₹5 lakh into one five-year FD, you could put ₹1 lakh each into one-, two-, three-, four- and five-year deposits. Every year, one deposit matures. If rates have risen, you reinvest at the higher rate. If you need money, you have some available without breaking a deposit early and paying a penalty.

Safety first

• Deposit insurance: the Deposit Insurance and Credit Guarantee Corporation (DICGC) insures up to ₹5 lakh per depositor per bank, covering principal and interest together. If you have more than that, consider spreading it across banks.
• Non-bank deposits (like Bajaj Finance) are not covered by DICGC insurance. Check the company's credit rating, which should be high, before investing.
• Small finance banks are covered by DICGC, but they are smaller lenders, so keep each deposit within the insured limit.

Don't forget tax

• FD interest is taxable at your income-tax slab rate.
• Banks deduct TDS if your interest from one bank exceeds ₹50,000 a year, or ₹1 lakh for senior citizens.
• If your total income is below the taxable limit, submit Form 15G (or 15H for senior citizens) at the start of the financial year to avoid TDS.

FD or small savings schemes?

For many savers, post office schemes currently pay more than bank FDs for similar periods, with a government guarantee. The Senior Citizens' Savings Scheme pays 8.2%, for example. See our list of small savings rates for October-December 2026.

This article is for information only and is not investment advice.

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