Bank fixed deposits: Banks are expected to maintain current deposit rates as credit expansion and the recent CRR (Cash Reserve Ratio) reduction provide adequate liquidity for lending requirements through FY25.
Banking officials indicate that reduced credit expansion has decreased the credit-deposit gap. The Rs 1.16-lakh-crore liquidity addition through reduced CRR requirements in the recent RBI monetary policy will help maintain current deposit rates.
According to banking officials, deposit rates have reached their periodic maximum, and special deposit schemes are unlikely to be modified when this fiscal year concludes.
“One can safely say that deposit rates will be stable at current levels. They will be on hold with a downward bias. The liquidity infused via CRR will benefit all banks,” said PR Rajagopal, executive director of Bank of India. “Each bank will, of course, take stock of rates in different buckets noting the demand for credit,” Rajagopal told ET.
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As per central bank statistics, credit growth for the fortnight ending November 15 decreased to 11% annually, whilst deposits increased by 11.21% year-on-year.
This pattern has persisted since the fortnight ending October 18, when deposit growth exceeded credit growth initially in 30 months. RBI data indicates that total deposits for the fortnight ending November 15 were Rs 218.54 lakh crore, whilst outstanding credit was ₹173.62 lakh crore, with both figures showing slight decreases compared to the previous fortnight.

Will Bank Fixed Deposit Rates Start Coming Down?

Financial experts indicate that while deposit rates may trend downwards, any actual reductions would be contingent on the RBIlowering its benchmark repo rate.
“Deposit rates will stay where they are. Banks will want to still make sure of the durability of liquidity and hence will not cut rates in a hurry,” said Jaideep Iyer, head of strategy at RBL Bank. “The upward bias in deposit rates is probably over, but for rates to come down a definitive signal is awaited – like a cut in the repo rate.”
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Banks have recently introduced special programmes to attract deposits. State Bank of India (SBI) introduced the Amrit Vrishti scheme, offering 7.25% interest on 444-day fixed deposits. This scheme remains available until March 2025.
Banking officials emphasise that reducing deposit rates requires a clear downward trajectory in inflation leading to a lower repo rate.
“Expectations are that agriculture output will improve from here on, which will cool food prices and bring inflation down. This could open the space for a cut in the repo rate, which may well be the signal for deposit rates to move downwards,” said Sanjay Mudaliar, executive director of Bank of Baroda.
The reduction in CRR has heightened anticipation of a repo rate reduction in February. The central bank’s monetary policy committee will announce its next rate decision on February 7.