Bank of Baroda and Indian Overseas Bank have revised their fixed deposit (FD) rates, according to reporting by Moneycontrol.com. The exact new rates are in each bank's own rate card, so check them before you book.
If you plan to open or renew an FD soon, compare the new rates first. Even a small gap in rates can add up over a year or more.
Key takeaways
- Both banks have revised FD rates, as reported by Moneycontrol.com.
- The new rate for your tenure is what counts, not the headline.
- A small rate gap can mean a few thousand rupees on a large deposit.
- Don't break an old FD in a hurry, as penalties can eat the gain.
- Compare after-tax returns and check your deposit insurance cover.
How FD rate revisions work
An FD is a simple deal. You lock money with a bank for a fixed time. The bank pays you interest at a rate agreed on the day you book.
Banks review their FD rates from time to time. They look at how much money they need. They also check what other banks offer and what the RBI's policy rate is doing. When they revise the rates, the new rates apply only to new or renewed deposits.
Your existing FD keeps its old rate until it matures. That's the good news and the bad news. A rise won't lift your current deposit. A cut won't hurt it either.
Rates also differ by tenure. A one-year FD and a three-year FD often carry different rates. Senior citizens usually get a little extra on top.
What it means for your savings
We don't have the exact new rates from the source, so here's a simple illustration. It shows how much a rate gap is worth on ₹1,00,000 kept for one year. The numbers use plain yearly interest and are only examples.
| Example FD rate | Interest in 1 year on ₹1,00,000 | Extra vs 6.0% |
|---|---|---|
| 6.0% | ₹6,000 | ₹0 |
| 6.5% | ₹6,500 | ₹500 |
| 7.0% | ₹7,000 | ₹1,000 |
| 7.5% | ₹7,500 | ₹1,500 |
So a half percent gap earns you about ₹500 on a lakh. On ₹10 lakh, that's about ₹5,000 a year. Now you can see why it pays to compare before you lock in.
You can also see current bank rates side by side on our interest rates page. It helps you spot the best offer for your tenure.
Who is affected
Savers who are about to book a new FD are affected the most. So are people whose FD matures soon and will be renewed at the new rate.
Senior citizens and retirees should pay close attention. Many of them depend on FD interest for monthly costs. A small rate change matters more to them.
People with running FDs are not affected right now. Their rate stays fixed until maturity. Borrowers aren't directly hit either, though deposit rates and loan rates often move in the same direction over time. If you're planning a loan, our EMI calculator can help you test costs.
Customers of other banks may also feel the effect. When two large public sector banks revise rates, others sometimes follow.
What to do now
You don't need to rush. Follow these simple steps.
- Open the rate card on each bank's website or ask at your branch.
- Find the rate for the exact tenure you want.
- Check if a senior citizen rate applies to you.
- Compare with at least two other banks.
- Think about tax. Interest above ₹40,000 a year at one bank can attract TDS. For seniors, the limit is ₹50,000. TDS is tax cut at source.
- Book only after you've read the premature withdrawal rules.
Also keep deposit safety in mind. Deposits in a bank are insured by the DICGC up to ₹5 lakh per depositor per bank. If you hold more, you may spread it across banks.
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Frequently asked questions
Will the new FD rates apply to my existing deposit?
No. The new rates apply to fresh deposits and renewals. Your running FD keeps the rate you booked it at until it matures.
Should I break my old FD to get the new rate?
Usually not. Banks often charge a penalty for early exit. Check the penalty first and do the math before you decide.
Where can I find the exact new rates?
Check each bank's official website, mobile app or branch. They list rates by tenure and by customer type, such as senior citizens.
BankCreds analysis
A rate revision sounds big, but for most savers it's a small money event. The size of the gap matters more than the headline.
Take a retired person with ₹10 lakh in one FD. A rise of 0.25 percentage points adds about ₹2,500 a year. That's helpful, but it won't change a budget. A cut of the same size costs the same amount.
What this does not mean
It doesn't mean you should rush to break an old FD. Early exit usually brings a penalty. That penalty can cancel the gain from a slightly higher new rate.
The better move is to act only at renewal or when new money arrives. Also remember that FD interest is taxable. A higher rate helps less if you fall in a high tax slab. Compare the after-tax return, not just the headline number.
This section is BankCreds' own assessment of what the development means for Indian borrowers and savers. It is independent commentary, not part of the source reporting above.
Sources & references
- Moneycontrol.com — originating report https://www.moneycontrol.com/news/business/personal-finance/bank-of-baroda-indian-overseas-bank-revise-fd-rates-check-latest-interest-rates-14078136.html
- DICGC deposit insurance — Deposit insurance cover of up to ₹5 lakh per depositor per bank https://www.dicgc.org.in/
Source links are shown as plain text, not clickable links. Copy a URL into your browser to read the original report.
Editorial note & disclaimer
How this was reported. The development above is attributed to the source or sources listed. BankCreds does not independently verify a third party's reporting; where a figure or a regulatory position is stated as fact, it is either attributed or drawn from the regulator's own published material. Everything under "BankCreds analysis" is our own assessment.
Rates and figures. Interest rates, per-gram values and premium bands quoted here are indicative, move daily, and differ by borrower profile, city and lender policy. Confirm the final number with the institution before you act on it — the sanction letter or policy schedule governs, not a news report.
Not financial advice. This article is general information for an Indian audience. It is not investment, tax, credit or insurance advice, takes no account of your circumstances, and BankCreds is not a lender, broker, distributor or advisor. Consider speaking to a SEBI-registered investment adviser or a qualified professional before acting.
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