Fixed Deposits (FD) are the fundamentals of the Indian finance segment, and the best thing is that they are an investment alternative that involves minimum risk along with fixed returns. As the year 2025 is going on, let’s know about the present rates of interest on fixed deposits and what can be seen in the upcoming months.
Current Interest Rates of Fixed Deposits in India
RBI’s (Reserve Bank of India) monetary policy choices considerably affect the interest rates of fixed deposits. As of June 2025, the RBI has kept the repo rate at around 5.50%. This further led to affecting FD interest rates, and currently, well-known banks and NBFCs are providing rates between 2.50% to 8.50% annually, for the period of 7 days up to 10 years.
Factors Affecting Fixed Deposit Interest Rates
Monetary policy or RBI (Reserve Bank of India)
RBI’s move on the repo rate and cash reserve ratio considerably influences the interest rates of fixed deposits.
Inflation also impacts FD rates
An increase in the inflation rate causes an increase in the interest rates of fixed deposits because banks focus on keeping the purchasing power of deposits intact.
Economic growth also impacts FD interest rates to a great extent
A rapidly progressing economy can effectively lead to an increased interest rate on fixed deposits because banks resort to drawing attention to deposits to easily fund the lending activity.
Liquidity in the banking system
When banks have sufficient liquidity, they may not raise fixed deposit interest rates. However, during times when banks need more funds to lend, they offer higher interest rates on fixed deposits to encourage more savings.
Market competition
As digital banks and fintech platforms continue to grow, competition among banks has become stronger. To attract investors, many institutions offer slightly higher FD interest rates, which indirectly benefits depositors.
FD Interest Rates in India: What to Expect in the Year 2025?
Considering the current economic trend, there are expectations for fixed deposit interest rates in 2025. Let’s know the expectations for this year:
Consistency in interest rates
As the Reserve Bank of India is stabilizing repo rates, FD interest rates will be consistent in the short term. This stability will help investors plan their finances better without worrying about sudden changes in returns.
Growing trend
Considering the fact that the Indian economy continues to expand and show signs of growth, fixed deposit interest rates may remain stable or show a moderate upward trend, depending on inflation and RBI policy decisions.
Competition also plays an important role
As there is an increase in the fintech sector organizations and digital banks, the Indian banking vertical will see enhanced competition that will further boost FD interest rates.
Focus on senior citizens
Banks are expected to offer higher interest rates on fixed deposits for senior citizens in 2025 as well. This helps them secure better returns and a stable income during retirement.
Increasing trend toward longer tenure fixed deposits
Because of the increasing stability of interest rates, many investors may invest in long-term FDs to lock in their investments and enjoy today’s interest rate levels. Long-term FDs might gain popularity this year.
Growing popularity of corporate and NBFC FDs
A growing number of investors are turning to corporate and NBFC FDs, which typically offer better returns than traditional banks.
Fixed deposit is one of the safest and widely known investment alternatives available in India. With lesser risk and consistent returns, it attracts many people. As we can see, the trend for 2025 makes it crucial to stay up to date on the current FD interest rate. By staying updated and choosing financial institutions like Mahindra Finance, you can make the best decisions for choosing an FD as an investment option.
