Bank of India (BoI), a major public sector bank, has announced the withdrawal of its special 400-day fixed deposit (FD) scheme, which previously offered a peak interest rate of 7.30%. Alongside this, the bank has slashed interest rates on its short-term and medium-term fixed deposits across various maturities, effective April 15, 2025. The move follows the Reserve Bank of India’s (RBI) recent 25 basis points (bps) repo rate cut to 6% on April 9, 2025, as part of its shift to an ‘Accommodative’ stance to spur economic growth.
For deposits below INR 3 crores, the revised rates are notably lower. FDs maturing between 91 and 179 days will now earn 4.25%, down from previous levels, while those between 180 days and less than one year will offer 5.75%. Deposits maturing in one year will fetch 7.05%, and those between one year and up to two years will earn 6.75%. For larger deposits between INR 3 crores and less than INR 10 crores, the bank has set rates at 5.75% for 91 to 179 days, 6.25% for 180 to 210 days, and 6.50% for 211 days to less than one year. One-year deposits in this bracket will also earn 7.05%, while those above one year to less than two years will get 6.70%.
The bank continues to offer preferential rates for senior citizens. Super senior citizens will receive an additional 0.65% interest, while senior citizens will get an extra 0.50% on FDs with maturities of six months and above for amounts below INR 3 crores. For example, a super senior citizen with a one-year FD below INR 3 crores would earn 7.70%, while a senior citizen would get 7.55%.
The decision to withdraw the 400-day scheme and reduce rates aligns with broader market trends following the RBI’s rate cut, which aims to boost liquidity and stimulate loan growth, projected to rise significantly in FY26 after a muted 11% in FY25. However, this adjustment may disappoint depositors seeking higher returns amidst easing inflation, which the RBI has noted as a key factor in its dovish stance. Bank of India’s move mirrors actions by peers like State Bank of India and HDFC Bank, which have also tweaked FD rates in response to the repo rate reduction, reflecting a broader recalibration in the banking sector.
A BoI spokesperson stated, “The revised rates reflect the current monetary policy environment and our focus on balancing depositor returns with lending growth.” The bank’s decision underscores the ripple effects of the RBI’s policy shift, which is expected to drive credit expansion but may squeeze net interest margins (NIMs) for banks in the near term. For depositors, particularly senior citizens relying on FD income, the lower rates signal a challenging period ahead, though the preferential rates offer some relief.