At a time when most banks are lowering fixed deposit (FD) interest rates, Bank of India has surprised depositors by increasing rates on select FD schemes.
The revised rates came into effect from May 18 and apply to deposits below Rs 3 crore.
The decision stands out because many banks have reduced FD returns after the Reserve Bank of India (RBI) cut the repo rate by 125 basis points since February 2025.
With interest rates falling across the banking sector, Bank of India’s latest move could attract investors looking for stable and higher returns.
New FD Rates for Customers
Bank of India has increased rates mainly for deposits between 1 year and 3 years.
Regular customers can now earn:
6.50% on FDs from 1 year to less than 2 years
6.60% on FDs from 2 years to less than 3 years
6.70% on 3-year deposits
Senior citizens and super senior citizens will get even higher returns under the revised structure.
The bank said senior citizens will receive an extra 50 basis points on deposits from 6 months to less than 3 years.
Super senior citizens will get an additional 65 basis points during the same period.
For deposits of 3 years and above, the extra benefit increases further, making these schemes more attractive for elderly investors.
Why Most Banks Are Cutting FD Rates
Since February 2025, the RBI has reduced the repo rate several times to support economic growth.
As a result, many public and private sector banks have lowered FD interest rates, especially in the 1–3 year category.
Banks usually reduce deposit rates when borrowing becomes cheaper in the market.
This helps them protect their profit margins.
Despite lower rates, fixed deposits continue to remain popular among conservative investors because they offer guaranteed returns, capital safety, and flexible investment periods.
What FD Investors Should Keep in Mind
Experts say investors should not choose an FD based only on the highest advertised interest rate.
Before investing, depositors should check:
Whether the special rate is available only for a limited tenure
Premature withdrawal penalties
Callable and non-callable deposit conditions
Post-tax returns after deductions
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 investors looking for stability during a falling interest rate cycle, the latest FD hike may offer a good opportunity.
However, experts advise balancing returns with liquidity needs and tax planning before locking money into long-term deposits.