Most banks have been continuously reducing fixed deposit (FD) rates since February 2025, when the Reserve Bank of India (RBI) cut the repo rate by 125 basis points. But, Bank of India has taken the opposite step and increased interest rates on select medium and long term deposits. According to an official press release, this public sector bank has increased FD rates on term deposits below ₹3 crore from May 18; These deposits are for a tenure of one to three years. The move comes at a time when following the RBI’s round of monetary easing, in which the repo rate was reduced to 5.25 per cent, many public and private sector banks have reduced deposit rates to protect their margins.
**Revised FD rates of Bank of India**
Bank of India said senior citizens will get an additional benefit of 50 basis points on deposits with tenure ranging from six months to less than three years, while super senior citizens will get an additional benefit of 65 basis points. For deposits with a tenure of three years or more, this additional benefit increases to 75 basis points for senior citizens and 90 basis points for super senior citizens.
**Banks are keeping an eye on RBI’s repo rate**
The fixed deposit market has been under pressure since the RBI started cutting rates in February 2025. Many private lenders and some public sector banks have cut returns on fixed deposits – especially on deposits with tenures of one to three years – as low policy rates gradually trickle down to deposit products. Despite this trend, FDs remain a popular option for traditional investors as they offer capital protection, predictable returns and flexible tenure options. However, experts advise against making investment decisions based only on interest rates. FD investors should check whether the interest rate is applicable only for a specific period, compare callable and non-callable deposits, understand the penalty for premature withdrawal and assess the post-tax returns. Senior citizens should also compare the benefits available under particular categories, as the difference in interest rates can be quite high. Bank of India is also offering an additional return of 15 basis points on non-callable deposits above ₹1 crore, for a minimum tenure of one year.