Indian Banks Cut Fixed Deposit Rates Following RBI Repo Rate Drop

In the face of recent rate cuts by the Reserve Bank of India, various banks have adjusted their fixed deposit (FD) interest rates, offering both reductions and selective increases depending on deposit tenure and customer category. Senior citizens benefit from attractive short-term FD rates, with some banks like Bandhan Bank offering up to 8.25% on one-year deposits, while others such as IndusInd Bank and AU Small Finance Bank provide competitive rates up to 8.05%. These rates offer a lucrative option for senior citizens to earn interest on idle funds, especially with the forthcoming increase in the tax deduction threshold for FD interest from Rs 50,000 to Rs 1 lakh starting April 1, 2025. Additionally, senior citizens whose total income after deductions is below Rs 12 lakh can submit Form 15H to avoid Tax Deducted at Source (TDS) on FD interest, further enhancing the benefits of investing in these instruments. Alongside these changes, investment platforms like IG are offering temporary high-interest cash rates of 8.5% AER for certain investment accounts, providing an alternative for investors holding cash while waiting for market clarity. These developments underscore a dynamic interest rate environment aimed at balancing liquidity management and providing attractive returns, particularly for senior citizens and cautious investors.