Canara and Kotak Mahindra Bank Reduce FD Rates Following RBI's Repo Rate Cut

The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points. Following this move, Kotak Mahindra Bank and Canara Bank have reduced their fixed deposit (FD) interest rates by up to 20 basis points, effective from April 2025.

Kotak Mahindra Bank FD Rate Adjustments

Kotak Mahindra Bank has reduced FD interest rates by 15 basis points for select tenures, effective April 9, 2025. The revised rates now range from 2.75% to 7.30% for general customers and from 3.25% to 7.80% for senior citizens.

The 390-day tenure now offers an interest rate of 7.25%, down from 7.40%. For deposits between 391 days and 23 months, the interest rate has been reduced by 10 basis points to 7.30%. These changes are aligned with the RBI’s dovish stance on interest rates and reflect Kotak’s strategy to manage liquidity and deposits effectively.

Kotak now offers a wide range of FD interest rates for deposits below ₹3 crore, with additional slabs for senior citizens.

Canara Bank FD Rate Adjustments

Canara Bank has also revised its FD interest rates following the RBI announcement. For deposits below ₹3 crore, interest rates for certain tenures have been reduced by up to 20 basis points. These changes are effective from April 10, 2025.

The bank now offers interest rates between 4% and 7.25% for general customers and 4% to 7.75% for callable deposits for senior citizens. For FDs maturing between 180 and 269 days, the rate has been reduced from 6.25% to 6.15%.

Deposits maturing in 444 days will now earn 7.25%. The bank emphasizes a 0.50% additional benefit for senior citizens on deposits of ₹3 crore and below, with a maturity of 180 days or more (excluding NRO/NRE and CGA deposits). This aligns with the market’s direction toward offering competitive rates for older citizens who prefer low-risk investments like fixed deposits.

Penalty for Early Withdrawal

Both banks have imposed penalties on early withdrawals. Kotak Mahindra Bank charges a 1.00% penalty on premature withdrawals for FDs of 365 days or more. Canara Bank imposes a similar 1.00% penalty on early or partial withdrawal of domestic or NRO deposits below ₹3 crore. These penalties aim to ensure deposit stability amid fluctuating market conditions.