If You Opened an FD a Day Before the Repo Rate Cut, Will It Affect Your Interest?

The Reserve Bank of India has cut the repo rate by 0.25%, bringing it down to 5.25% after the December MPC meeting. While this move signals relief for borrowers through lower loan EMIs, it also raises an important question for millions of FD investors, will fixed deposit interest rates fall, and will your existing FD be affected?

Here’s a clear look at what this rate cut means for your deposits.

Will Your Existing FD Be Impacted?

If you opened an FD just a day before the repo rate cut , there is good news. Your FD remains completely unaffected.

This is because the interest rate on a traditional fixed deposit is locked on the day you invest. Any future movement in the repo rate whether a hike or a cut, does not change your agreed interest rate. So, even if banks start reducing FD rates soon, your returns stay exactly the same.

What About Floating Rate FDs?

Some banks now offer floating rate FDs, where the interest rate is directly linked to the repo rate.
In this case, the RBI’s move will affect your return.

• If the repo rate falls, the FD interest rate may also go down.
• If the repo rate rises, your FD returns may increase.

So, floating rate FDs move up and down based on RBI policies, unlike traditional FDs that stay fixed.

Will Banks Reduce FD Rates Soon?

Although the RBI announced the repo rate cut on December 5, banks haven’t yet updated their FD rates. However, a downward revision is highly likely in the coming days. Once banks roll out new interest rate slabs, FD returns, especially on medium and long tenures—may come down.

This makes it a good time for anyone planning an FD to lock in rates before banks update their tables.

The latest repo rate cut brings mixed outcomes for savers. Those who locked in fixed-rate FDs earlier can relax, their returns are fully protected. But floating-rate FD holders will see their earnings shift with policy changes. And for new investors, this may be the last window to secure higher FD rates before banks begin trimming them.