Archive · 27 Jul 2025
RBI: Savings Deposit Rates at Historic Low for Some Banks
Some government-owned banks now have very low interest rates on savings accounts, the lowest since rules changed in 2011.
The central bank allowed banks to set their own rates.
When the central bank lowered interest rates, banks also lowered the rates for loans and deposits.
Interest rates on loans decreased more for government banks than for private banks during this time.
Savings deposit rates at some Public Sector Banks (PSBs) are at historic lows.
RBI deregulated savings bank deposit interest rates in October 2011.
Weighted average domestic term deposit rates for fresh deposits have declined.
Banks adjusted lending rates downward in response to policy rate reductions.
Decline in lending rates was higher for PSBs than private banks from February-May 2025.
- Who
- Public Sector Banks, the Reserve Bank of India (RBI), and commercial banks.
- What
- Savings deposit rates of some Public Sector Banks are at historic lows.
- When
- Rates are at historic lows since deregulation in October 2011; data from February-May 2025 is discussed.
- Where
- Not explicitly specified in the article.
- Why
- Due to deregulation and adjustments following reductions in the policy repo rate.
Depositors
Borrowers
Impact of Low Deposit Rates
Depositors
Lower interest rates on savings.
Borrowers
Impact on borrowers through lower lending rates.
- Deregulation Date
- October 2011
- Policy Repo Rate Reduction (since Feb 2025)
- 100 bps
- Lending Rate Decline (Fresh Loans, Feb-May 2025)
- 26 bps
- Lending Rate Decline (Outstanding Loans, Feb-May 2025)
- 18 bps
- Term Deposit Rate Decline (Fresh Deposits, Feb-May 2025)
- 51 bps
- Term Deposit Rate Decline (Outstanding Deposits, Feb-May 2025)
- 2 bps
