Fixed deposit rates in October 2025: Lock in 7-8% returns before cuts begin

FD Rates in October: The RBI's latest monetary policy minutes suggest a possible rate cut ahead, prompting experts to advise fixed deposit investors to lock in current rates before banks lower returns

The Reserve Bank of India (RBI)’s Monetary Policy Committee decided to hold interest rates steady in its October meeting, but the minutes released on Wednesday suggest a cut could be on the horizon.

 

RBI Governor Sanjay Malhotra said there was still “room for a further rate cut” and that it would be done “at an opportune time to have a desirable impact.” The Governor, along with five other members of the six-member committee, voted to maintain the status quo on the short-term benchmark lending rate at the meeting that concluded on October 1.

 

The repo rate — the rate at which the central bank lends to commercial banks — directly influences borrowing costs and deposit rates across the economy. With the RBI signalling that a reduction remains possible, fixed deposit (FD) investors may soon face lower returns.

 

Locking in current rates in October

 

Financial experts suggest investors act before banks begin adjusting their deposit rates.

 

“If you’re planning to open a new FD, consider doing so soon to lock in the current higher interest rates before banks adjust them downward,” said Adhil Shetty, CEO of BankBazaar.

 

Few banks currently offer returns of up to 8% or slightly more on fixed deposits. For instance, if an investor secures an FD at 8% and rates later fall to 7.7% or 7.5%, the higher rate continues for the full tenure.

 

“Locking in an FD means securing a fixed interest rate for a specific period. Once invested, the money cannot be withdrawn before maturity without a penalty. This ensures the investor continues to earn the agreed rate, even if interest rates drop in the future,” said Shetty.

 

Take a look at the best FD  interest rates offered by various banks, according to Paisa Bazaar:

 

Small finance banks FD rates List

 

Jana Small Finance Bank: Highest rate 8% for 5 years; 7.25% (1-year), 7.50% (3-year), 8% (5-year).

slice Small Finance Bank: Highest rate 7.75% for 18 months 1 day to 18 months 2 days; 6.25% (1-year), 7.50% (3-year), 7% (5-year).

Suryoday Small Finance Bank: Highest rate 8.05% for 5 years; 7.40% (1-year), 7.25% (3-year), 8.05% (5-year).

Utkarsh Small Finance Bank: Highest rate 7.65% for 2 to 3 years; 6% (1-year), 7.65% (3-year), 7.25% (5-year).

 

Private sector banks FD rates List

 

Bandhan Bank: Highest rate 7.20% for 2 to less than 3 years; 7% (1-year), 7% (3-year), 5.85% (5-year).

DCB Bank: Highest rate 7.20% for 37 to 38 months; 6.90% (1-year), 7% (3-year), 7% (5-year).

Jammu & Kashmir Bank: Highest rate 7.10% for 888 days; 6.60% (1-year), 6.75% (3-year), 6.50% (5-year).

RBL Bank: Highest rate 7.20% for 18 months to 3 years; 7% (1-year), 7.20% (3-year), 6.70% (5-year).

 

Public sector banks FD Rates List

 

Bank of Maharashtra: Highest rate 6.70% for 366 days; 6.20% (1-year), 6.20% (3-year), 6.10% (5-year).

Central Bank of India: Highest rate 6.75% for 2222 or 3333 days; 6.40% (1-year), 6.25% (3-year), 6.25% (5-year).

Indian Bank: Highest rate 6.70% for 444 days; 6.10% (1-year), 6.25% (3-year), 6% (5-year).

Indian Overseas Bank: Highest rate 6.70% for 444 days; 6.60% (1-year), 6.20% (3-year), 6.20% (5-year). 

 

What are the options for investors?

 

While depositors may be disappointed by falling rates, the development could bring some relief for borrowers.

 

“Banks and financial institutions are required to pass on the benefit of a repo rate cut to borrowers on floating-rate loans linked to the External Benchmark Lending Rate (EBLR), such as home and vehicle loans. This results in a reduction in EMIs for such loans,” said Mandeep Mehta, Group CFO at PB Fintech.

 

For fixed-rate loans like personal loans, however, interest rate decisions rest with individual banks, so the relief may not be immediate.

 

Larger banks often revise their rates more quickly, while smaller ones may take longer to follow.

 

“For fixed depositors, any rate changes will affect new deposits, but the interest rates on existing FDs will remain unaffected until maturity,” said Shetty.

 

With further cuts not ruled out, investors may find it prudent to lock in their deposits now rather than wait for lower rates to set in