Even as most banks have steadily lowered fixed deposit (FD) rates after the Reserve Bank of India’s cumulative 125 basis points repo rate cuts since February 2025, Bank of India has gone the other way, raising interest rates on select medium- and long-term deposits.
The state-owned lender has increased FD rates for deposits below Rs 3 crore across the 1-year to 3-year bucket, effective May 18, according to an official release. The move stands out at a time when several public and private sector banks have trimmed deposit rates to protect margins after the RBI’s rate easing cycle brought the repo rate down to 5.25%.
Bank of India’s revised FD rates
| Tenure | Regular customers | Senior citizens | Super senior citizens |
| 1 year to less than 2 years | 6.50% | 7.00% | 7.15% |
| 2 years to less than 3 years | 6.60% | 7.10% | 7.25% |
| 3 years | 6.70% | 7.45% | 7.60% |
(Source: Bank of India)
Bank of India said senior citizens will get an additional 50 basis points for deposits from 6 months to less than 3 years, while super senior citizens will receive 65 basis points extra. For deposits of 3 years and above, the additional benefit rises to 75 bps for seniors and 90 bps for super seniors.
Banks follow RBI repo rate cuts
The broader FD market has been under pressure since the RBI began cutting rates in February 2025. Many private lenders and some PSU banks have reduced FD returns, especially in the 1–3 year segment, as lower policy rates gradually transmitted to deposit products.
Despite that trend, FDs remain a popular choice for conservative investors because they offer capital protection, predictable returns and flexible tenure options. However, experts say headline rates alone should not drive investment decisions.
FD investors should check whether the rate is available only for specific tenures, compare callable versus non-callable deposits, understand premature withdrawal penalties, and evaluate post-tax returns. Senior citizens should also compare special category benefits, as the rate differential can be meaningful.
Bank of India is also offering an additional 15 basis points on non-callable deposits above Rs 1 crore with a minimum tenure of one year.
For depositors looking for stability amid a falling rate environment, the latest hike offers a rare opportunity—but locking money in should depend on liquidity needs and tax efficiency, not just the highest advertised return.
Disclaimer:
Fixed deposit interest rates are subject to change at the discretion of banks. Investors should verify the latest rates, terms, premature withdrawal penalties, and eligibility conditions directly with the bank before making any investment decision. Returns mentioned are indicative and may vary based on deposit amount, tenure, and customer category.