In a move that could impact millions of retail investors and savers, the State Bank of India (SBI) has announced a reduction in interest rates on both fixed deposits (FDs) and savings accounts, effective June 15, 2025. The bank has slashed FD rates by 25 basis points across all tenure slabs, while savings account interest has been reduced by up to 50 basis points, depending on the balance maintained.

The revised rates will affect both new and existing depositors, with the most notable impact on short- to mid-term deposit tenures. Savings accounts with balances above ₹10 lakh will see a sharper decline in returns, while those with lower balances will also witness reduced earnings.

This is SBI’s second rate revision in the current financial year, driven by declining inflation, surplus liquidity in the banking system, and recent monetary policy signals from the Reserve Bank of India (RBI). Experts say that with the central bank focusing on growth and cutting key policy rates, major lenders like SBI are realigning deposit rates accordingly.

Financial advisors warn that this rate reduction may prompt savers to reassess traditional instruments like FDs and look for alternatives such as debt mutual funds, tax-saving bonds, or high-yield NBFC deposits, especially for long-term financial planning.

For senior citizens who depend heavily on FD interest as a source of monthly income, this cut may further squeeze their earnings. Many are now considering deposits or using senior citizen-specific investment schemes to balance risk and return.

SBI continues to be India’s largest bank in terms of deposits, and such changes often set the tone for the broader banking sector. As other public and private sector banks are expected to follow suit, customers may need to diversify their portfolios and stay updated on further rate actions in the coming months.