The Reserve Bank of India (RBI) has reduced interest rates by 125 basis points in 2025, including a 25-basis-point cut announced during the Monetary Policy Committee (MPC) meeting on December 5.
This continuous reduction in the repo rate is directly affecting fixed deposit (FD) returns across the country. As the repo rate falls, banks
and Non-Banking Financial Companies (NBFCs) lower their deposit rates, which has reduced the returns that traditional savers typically rely on.
Banks—both public and private—have already revised their FD rates downward. Earlier, many fixed deposits offered 8–9% returns, but now most bank FDs fall in the 6.5% to 7.5% range.
This has created concern among depositors who depend on fixed and secure returns from bank deposits. NBFCs, too, have reduced their rates, but many still offer comparatively higher returns than banks.
Senior citizens continue to receive an extra 0.25% to 0.50% interest, giving them a small advantage despite the overall rate decline.
NBFC and Corporate FD Rates
Even after rate cuts, several NBFCs and corporate institutions are offering competitive interest rates to attract depositors. For example:
Bajaj Finance: 7.30%
Sundaram Finance: 7.50%
Manipal Housing Finance: 8.50%
Shriram Finance: 8.65%
Muthoot Capital: 8.85%
These returns—especially those above 8%—are drawing investor interest. Many individuals are shifting from bank FDs to corporate FDs to earn higher annual returns.
For senior citizens, corporate FDs become even more attractive due to the additional rate benefits. However, while the returns may seem appealing, they also come with certain risks that investors should understand well before investing.
Risks and Safe Investing Tips
Experts emphasize that higher returns often come with higher risks. While bank FDs are insured by the Deposit Insurance
and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per depositor per bank, corporate FDs do not offer any insurance protection.
This means that if the issuing company faces financial trouble or defaults, investors may lose their money.
Corporate FDs are influenced by the financial health and stability of the company. Therefore, investors must check the company’s:
CRISIL, ICRA, or CARE credit rating (preferably AAA or AA)
Financial statements and balance sheet strength
Past performance and repayment track record
Market reputation and long-term stability
Although NBFCs are regulated by the RBI, the risk is still not zero. Some NBFCs may face liquidity issues or market-related stress, which can impact their ability to repay deposits.
For this reason, choosing only top-rated, trusted companies is essential.
Experts believe that corporate FDs are suitable for investors willing to take slightly higher risks in exchange for better returns.
This option is especially beneficial for senior citizens looking to maximize their yearly income.
However, individuals who prioritize capital safety over returns should consider safer options like bank FDs, government-backed savings schemes, and post office deposits.
In conclusion, while the RBI’s rate cuts have reduced FD returns across banks and NBFCs, opportunities still exist for investors who choose carefully.
A balanced approach—considering both risk and return—can help investors make smarter financial decisions in a changing interest-rate environment.