HDFC Bank has lowered fixed deposit (FD) interest rates for select tenures effective Wednesday, December 17, 2025, joining a growing list of lenders recalibrating deposit returns after the Reserve Bank of India’s (RBI) 25-basis-point repo rate cut to 5.25% earlier this month. The move follows State Bank of India’s (SBI) FD trims that took effect on December 15, 2025, underscoring how quickly the latest policy easing is flowing through to everyday savings products—especially for deposits below ₹3 crore, the bracket most retail customers fall into. [1]
For depositors, the takeaway is simple: FD rates can change fast when the rate cycle turns, and the “best” return often depends on timing (locking in before a cut), tenor (which bucket your money sits in), and category (regular vs senior citizen). For borrowers, the picture is the mirror image: lending benchmarks are easing, and EMIs may soften as banks pass on the policy cut. [2]
What changed at HDFC Bank on December 17, 2025
According to updates reported on December 17, HDFC Bank reduced FD rates by 15 bps for the 18 months to less than 21 months bucket on deposits below ₹3 crore. For this key mid-tenor range, the revised rates are: [3]
- General customers:6.45% p.a. (down from 6.60%)
- Senior citizens:6.95% p.a. (down from 7.10%)
Beyond the headline cut, HDFC Bank’s updated rate card (for deposits under ₹3 crore) shows a ladder of rates from very short tenures (single-digit days) up to 10 years, with the top rates clustering in the 18-month-to-3-year zone. The revised schedule reported on Dec 17 includes: [4]
- 7–29 days:2.75% (senior: 3.25%)
- 1 year to <15 months:6.25% (senior: 6.75%)
- 15 months to <18 months:6.35% (senior: 6.85%)
- 18 months to <3 years (multiple buckets):6.45% (senior: 6.95%)
- 3 years 1 day to 5 years:6.40% (senior: 6.90%)
- 5 years 1 day to 10 years:6.15% (senior: 6.65%)
In other words, HDFC’s peak rate for regular depositors now sits at 6.45%, while senior citizens top out at 6.95% on these standard buckets—numbers that matter for retirees and conservative savers who use FDs as a core income tool. [5]
SBI’s FD cuts that triggered the “follow-on” move
SBI’s changes came first. Effective December 15, 2025, the country’s largest lender trimmed FD rates on select tenors—most notably the 2 years to less than 3 years bucket—while largely keeping other slabs steady. [6]
Key SBI retail FD revisions (domestic term deposits below ₹3 crore) include: [7]
- 2 years to <3 years (General):6.40% (revised from 6.45%)
- 2 years to <3 years (Senior):6.90% (revised from 6.95%)
- Special 444-day “Amrit Vrishti” scheme:6.45% (revised from 6.60%)
SBI’s own published rate table reflects that the 2–3 year cut was 5 bps, while the 444-day special tenor saw a deeper 15 bps reduction—a bigger signal that banks are trying to gradually lower their cost of deposits as policy rates ease. [8]
Why FD rates are falling now: RBI’s repo cut to 5.25% and the “low for longer” message
The immediate catalyst is the RBI’s decision in early December to reduce the policy repo rate by 25 bps to 5.25%, continuing a broader easing cycle in 2025. Alongside the rate cut, the central bank also signaled support for liquidity conditions, including steps aimed at improving transmission of lower rates into the banking system. [9]
Then, on December 17, 2025, reports citing an interview with RBI Governor Sanjay Malhotra added a clear directional cue: rates are expected to remain low for a “long period.” For savers, that kind of forward guidance often translates into one expectation—deposit rates may continue to soften if inflation stays benign and growth-supportive policy remains in place. [10]
The RBI has also been actively pushing banks to transmit policy moves. In a December 9 meeting in Mumbai with banking leaders, Malhotra urged lenders to pass on the benefit of rate cuts to customers to support sustainable growth—pressure that typically shows up most visibly in lending benchmarks first, and then (often) in deposit rate resets. [11]
Borrowers may benefit as banks cut lending benchmarks, even as savers see lower FD returns
While depositors face incremental cuts, borrowers are getting the relief headline. Multiple banks have reduced benchmark-linked lending rates in December after the repo cut, which can reduce EMIs (or shorten loan tenure, depending on the reset structure). [12]
A snapshot of rate transmission reported in mid-December includes: [13]
- SBI: reduced key lending benchmarks (including EBLR/RLLR-linked rates) effective Dec 15, 2025
- PNB: lowered repo-linked lending rate effective Dec 6, 2025
- Canara Bank: cut RLLR by 25 bps to 8.00%, effective Dec 12, 2025
- IOB: revised repo-linked lending rate effective Dec 15, 2025
That divergence—cheaper loans, leaner deposit yields—is typical when a central bank starts prioritizing growth support. Banks re-price assets and liabilities in tandem, but not always at the same speed.
A broader pattern: Canara Bank also revised FD rates earlier this month
HDFC and SBI aren’t alone. Canara Bank, in news reported on Dec 17, revised its FD rates for deposits under ₹3 crore effective December 8, 2025—and the direction was also downward. [14]
Notably, the report highlights that after the revision, Canara’s highest FD rate for general citizens became 6.15% on a 555-day tenure, compared with an earlier peak of 6.50% on a 444-day FD. [15]
This is an important signal for savers: the “highest rate” often shifts across banks and across specific tenors as lenders fine-tune deposit mobilization needs.
What FD investors should do now: practical, non-hype takeaways
1) Check the effective date and what it means for you
Rate cards are typically applied based on the booking/renewal date (not when you first started researching). With HDFC’s revision effective Dec 17 and SBI’s effective Dec 15, even a 48-hour gap can change your final return—especially on larger deposits or longer tenors. [16]
2) Don’t assume “longer is always better”—compare the best-paying buckets
Right now, both SBI and HDFC show stronger rates in the ~18 months to ~3 years zone than in the very long tenors (5–10 years) on standard retail slabs. That can matter if you’re deciding between locking long versus staying flexible. [17]
3) Senior citizens: the extra spread still matters, but the peak is moving
HDFC’s top senior rate in these standard buckets is reported at 6.95%, and SBI’s senior table includes higher long-tenor rates (including scheme-specific premiums). But the direction of change is down, so seniors relying on FD interest for income may want to review renewal timing and whether to stagger maturities. [18]
4) Remember deposit insurance limits when parking large sums
In India, deposit insurance through DICGC covers up to ₹5,00,000 per depositor per bank, including principal and interest (subject to the scheme rules). This is not a reason to avoid FDs—it’s a reason to be mindful of concentration if you’re placing substantially more than ₹5 lakh in one bank. [19]
5) Mind the tax angle: TDS thresholds have changed for FY 2025–26
FD interest is taxable, and banks may deduct TDS under Section 194A once annual interest crosses specified thresholds. As per an Income Tax Department tutorial note reflecting amendments (Finance Act, 2025), the threshold for bank/post office interest is ₹50,000, and for resident senior citizens it is ₹1,00,000 (subject to applicable conditions and rules). If you expect your total income to be below the taxable limit, forms such as 15G/15H may be relevant—check eligibility carefully. [20]
Bottom line: the rate-cut cycle is now showing up in your FD renewal screen
The big story on December 17, 2025 is not just that HDFC Bank trimmed one mid-tenor bucket. It’s that the post-repo-cut environment is producing a clear, synchronized repricing across India’s banking system:
- SBI trimmed select FD tenors from Dec 15 and adjusted a popular 444-day special scheme. [21]
- HDFC followed with a 15 bps cut effective Dec 17, lowering peak standard rates for retail depositors. [22]
- Loan benchmarks are falling across multiple banks, supporting lower EMIs. [23]
- And the RBI’s latest messaging suggests the low-rate environment may persist, which could keep pressure on deposit yields into 2026. [24]
For savers, this is the moment to be deliberate: compare tenors, understand renewal timing, diversify sensibly, and keep an eye on how quickly banks reset rate cards as the policy cycle evolves.
References
1. m.economictimes.com, 2. m.economictimes.com, 3. m.economictimes.com, 4. upstox.com, 5. www.outlookmoney.com, 6. sbi.co.in, 7. sbi.co.in, 8. sbi.co.in, 9. www.reuters.com, 10. www.reuters.com, 11. www.business-standard.com, 12. m.economictimes.com, 13. m.economictimes.com, 14. m.economictimes.com, 15. m.economictimes.com, 16. m.economictimes.com, 17. upstox.com, 18. www.outlookmoney.com, 19. www.rbi.org.in, 20. incometaxindia.gov.in, 21. sbi.co.in, 22. m.economictimes.com, 23. m.economictimes.com, 24. www.reuters.com
