HDFC Bank has announced a reduction in interest rates on select fixed deposits (FDs) below ₹3 crore, effective April 1. The bank has cut deposit rates by 35 basis points for FDs with a 35-month tenure and by 40 basis points for those with a 55-month tenure. Now, these deposits will earn a 7% interest rate, with senior citizens receiving an additional 0.50%.
Previously, HDFC Bank had offered 7.35% on 35-month deposits and 7.40% on 55-month deposits under its special edition FD scheme launched in July 2024. The bank had introduced these higher rates to attract deposits amid increasing credit demand.
Despite the Reserve Bank of India (RBI) cutting its policy rate by 25 basis points in February, banks have been slow to pass on the benefits to customers due to tight deposit mobilisation. Analysts suggest that lending rate reductions are yet to be fully transmitted. However, liquidity in the banking system has improved after the RBI infused over ₹5 trillion through open market operations and other measures.
The tight deposit environment was also evident in record certificate of deposit (CD) issuances, which reached ₹2.25 trillion in March to meet year-end funding requirements. Meanwhile, banking credit grew by 11.1% year-on-year, while deposit growth stood at 10.2% for the same period.
