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New Delhi, June 16, 2025 – In a move that impacts millions of account holders across the country, the State Bank of India (SBI)—India's largest public sector lender—has announced a significant cut in interest rates on both savings accounts and fixed deposits (FDs). This decision follows the Reserve Bank of India’s (RBI) recent repo rate reduction of 50 basis points, aimed at improving liquidity and easing borrowing costs.

While borrowers may find some relief in lower EMIs and reduced loan interest rates, depositors will have to contend with lower earnings on their bank deposits, including those meant for senior citizens.

🔻 SBI Reduces Interest Rates on Savings Accounts

Effective June 15, 2025, SBI has lowered the interest rate on savings accounts by 50 basis points. Regardless of the balance amount, all SBI savings accounts will now earn 2.5% annual interest, down from the previous 2.7% for deposits below ₹10 crore and 3% for deposits above ₹10 crore. This is a flat-rate reduction and affects every customer segment equally.

📉 Fixed Deposit (FD) Rates See Broad-Based Cuts

The reduction doesn't end with savings accounts. SBI has also revised its fixed deposit interest rates, particularly for FDs below ₹3 crore. Here are the key changes:

The steepest reductions are observed in the 1 to 3-year category, affecting short- and mid-term depositors the most. Senior citizens, though traditionally offered higher rates, have also faced cuts of up to 25 basis points.

🏠 Loan EMIs Get Cheaper with EBLR Cut

On the lending front, there is some respite for borrowers. SBI has reduced its External Benchmark Lending Rate (EBLR)—which is directly linked to the repo rate—by 50 basis points. As a result, home loan interest rates now range between 7.5% and 8.45%, making mortgages more affordable.

This is the third rate cut by RBI in 2025, bringing the repo rate down to 5.5%, following earlier reductions in February (25 bps) and April (25 bps).

🏦 Other Banks Follow Suit

SBI isn’t alone in revising deposit and lending rates. Here's how some other major banks are reacting:

• Bank of Baroda has trimmed its Marginal Cost of Funds Based Lending Rate (MCLR) by 5 basis points for select tenures and made small adjustments to FD rates.

• HDFC Bank has revised its savings account rate to a flat 2.75%, compared to its earlier tiered structure—2.75% for balances below ₹50 lakh and 3.25% for higher balances.

• ICICI Bank also reduced FD rates by 25 basis points on deposits under ₹3 crore.

💡 What This Means for You

• If you're a borrower, especially with a floating-rate loan (home, auto, or personal), your EMIs might reduce slightly, offering some financial relief.

• If you're a depositor, it's time to reassess your investment strategy. With interest rates falling, exploring mutual funds, debt instruments, or tax-saving FDs might yield better post-tax returns.

• Senior citizens, who rely heavily on FD interest for regular income, may need to look at alternate options like Senior Citizens’ Savings Scheme (SCSS) or RBI Floating Rate Bonds.

🔚 Final Word

SBI's rate revision aligns with the broader monetary policy trend aimed at stimulating growth. However, it presents a challenging landscape for conservative savers and retirees. Keeping an eye on inflation, real returns, and investment diversification is more crucial than ever.

Stay tuned for updates as more banks are expected to revise their rates in the coming weeks.