By buld_online 
Fixed deposit investors, take notice — your returns are shrinking fast. With the RBI delivering its third repo rate cut this year—this time by a sharp 50 basis points to 5.5%—banks are slashing FD rates aggressively.
Experts BT spoke to warn: the window to lock in decent returns is closing fast.
Since February 2025, the repo rate has been cut by a full percentage point. According to an SBI Research report, FD rates across banks have already dropped by 30–70 basis points.
“Transmission to deposit rates is expected to be strong in the coming quarters,” the report says, pointing to the likelihood of further cuts if inflation stays low and credit demand remains soft.
Interest rates on savings accounts have already sunk to 2.70%—the floor set by most banks. Fixed deposits are now following the same trajectory.
So what must one do? Here’s what experts say
1. Lock in higher rates now—before banks slash further:
Some Small Finance Banks still offer FD rates of 8% or more, while larger banks hover around 7%. “If you want to preserve returns, book long-term FDs now—especially while these higher rates are still available,” said a senior wealth advisor at a leading Mumbai-based firm.
But stick within the ₹5 lakh DICGC cover if you’re with smaller banks.
2. Prefer longer tenures over short-term FDs:
“Short-term rates will fall first. Longer tenures offer some protection as banks are slower to cut those,” said a fixed income strategist with a top investment advisory in Gurgaon.
Go long if you won’t need funds soon.
3. Use the laddering strategy to stay flexible:
“Laddering protects your entire FD corpus from rate shocks,” said a senior analyst at a Bengaluru-based financial consultancy.
By spreading FDs across maturities, you limit reinvestment at lower rates and keep part of your funds earning higher yields.
Experts agree: while borrowers benefit from falling rates, savers must act smart to shield their earnings. Wait too long, and you could lock into below-inflation returns for years.