The Reserve Bank of India (RBI) raised its repo rate by 25 basis points to 5.50%, but individual fixed-deposit renewals remain tied to each bank’s advance-published schedule.
The RBI’s Monetary Policy Committee unanimously approved the increase on Oct. 7. Central bank directions require banks to use deposit-rate schedules disclosed in advance, and banks cannot negotiate domestic deposit rates with individual customers.
NDTV Profit reported Oct. 23 that its renewal checklist urged depositors to review the rate available for their FD and compare alternatives. Bank schedules can set different rates by term and bulk-deposit size, and may distinguish deposits that do not allow premature withdrawal.
For term deposits, an advertised return that includes compounding must also be accompanied by the simple annual interest rate, RBI rules say. Individual domestic rupee deposits of ₹1 crore or less must include an early-withdrawal facility. If a depositor closes one before maturity, the bank calculates interest using the rate for the amount and period the money remained on deposit. A penalty may also apply under the bank’s board-approved policy; its components must be disclosed when the deposit is accepted.
India’s Income-tax Act, 2025, took effect April 1, 2026. Section 153 provides conditional deductions for interest on some deposits, with eligibility and limits varying by taxpayer category and deposit type.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures eligible deposits, including principal and interest, up to ₹500,000 per depositor per bank. It aggregates accounts at the same bank when they are held in the same right and capacity; deposits in different rights or capacities may qualify separately. Coverage applies separately at different banks.
The RBI projected consumer price inflation of 5.2% and real GDP growth of 7.1% for fiscal 2026-27. Its next Monetary Policy Committee meeting is scheduled for Dec. 2-4.
