FD Rates Rising Again: What Bank of India's Hike Means

Quick Answer: Bank of India raised deposit rates for one to under three years by 10 to 35 basis points on 2 November 2026, a month after the Reserve Bank of India raised the repo rate to 5.50%. Existing fixed deposits do not change; only new deposits and renewals earn the new rates. Check your renewal date before locking money away. Intro: For four years, deposit rates mostly moved in one direction: down, or sideways. That cycle may have turned. On 7 October 2026, the Reserve Bank of India's Monetary Policy Committee raised the repo rate by 25 basis points, from 5.25% to 5.50%, and changed its stance to "calibrated tightening". A month later, banks are starting to pass a little of that on to savers. Bank of India is the second bank in this cycle to move, after Indian Bank raised two special-deposit rates in late October. The hikes are small — 10 to 35 basis points, where one basis point is 0.01 percentage point — but they matter because they tell you which way the wind is blowing. If your fixed deposit matures in the next few months, the timing of your renewal suddenly matters more than it did all year.

What actually changed

Bank of India's revised rates, effective 2 November 2026 and reported by The Economic Times, apply to deposits below ₹3 crore: One-year deposits: 6.60%, up from 6.50%. One year to under two years: 6.70%, up from 6.50%. A new special 500-day deposit: 6.85% for general customers, 7.35% for senior citizens and 7.50% for super senior citizens, up from 6.50% on the earlier special deposit. Indian Bank had already raised its special 555-day deposit to 6.80% and its 777-day deposit to 6.75% on 23 October, each by 15 basis points. Behind the moves, system liquidity has tightened sharply. Surplus liquidity fell from more than ₹11 lakh crore in early September to about ₹1.96 lakh crore on 1 November, according to RBI data cited by The Economic Times. One-year certificate-of-deposit rates for public-sector banks have crossed 8% for the first time since early 2023. When banks pay more to borrow short-term, retail deposit rates usually follow — slowly.

What it means for your money, in numbers

Fixed deposit rates apply only to new deposits and renewals. A deposit booked last year keeps its old rate until maturity, whatever banks announce today. The illustrations below assume quarterly compounding, which many banks use; your bank's compounding frequency and the exact rate for your tenure can differ, so treat these as illustrations, not quotes: ₹5 lakh for one year at 6.50% grows to about ₹5,33,301 (interest about ₹33,301). At 6.60% it grows to about ₹5,33,826 (interest about ₹33,826). The 10-basis-point hike is worth about ₹525 on ₹5 lakh over a year. ₹5 lakh for 500 days at 6.85% grows to about ₹5,48,753. At the senior-citizen rate of 7.35% it grows to about ₹5,52,459 — a difference of about ₹3,706 over the same period. By contrast, ₹5 lakh sitting in a savings account paying around 2.50% earns about ₹12,500 in a year, before tax. The gap between a savings account and a one-year deposit is now roughly ₹21,000 on ₹5 lakh.

Should you lock in now, or wait?

Nobody can promise that rates will keep rising, and the next RBI policy meeting is not until 2–4 December 2026. But the structure of this moment suggests a practical middle path rather than an all-or-nothing bet: Do not rush to break an existing deposit. Premature-withdrawal penalties can wipe out more than a small rate gain, and the interest you have already earned is safe where it is. If a deposit matures in the next three months, avoid renewing it for five years on autopilot. A one-year or 500-day tenure keeps your options open if rates rise further, while still earning today's higher rate. Split a large sum into a ladder: for example, one part for one year, one part for two years, one part for a special tenure. As each rung matures, you can reinvest at whatever rate then prevails, instead of guessing the peak once. Keep your emergency fund liquid. Money you may need at short notice belongs in a savings account or a sweep-in deposit, not locked in a long deposit, however attractive the headline rate looks.

A proposal to watch, not a change yet

Separately, SBI Research proposed on 3 November 2026 that fixed-deposit interest be taxed at a flat 15% across maturities, and that the savings-account interest exemption be doubled from ₹10,000 to ₹20,000. Business Today reported the proposal, including SBI Research's illustration that ₹1 lakh of interest taxed at 30% would fall from ₹30,000 to ₹15,000 under a flat 15% rate. This is a research proposal, not a government announcement. No change to FD taxation has been announced, and the current slab-rate treatment of FD interest continues. Do not delay or accelerate a deposit decision on the strength of a proposal that may never become law; if it does reach the Budget, the details will matter more than the headline.

The 5-point FD check before you renew

1. Check the maturity date and the penalty for early withdrawal before touching any existing deposit. 2. Compare the rate for your exact tenure and amount, not the bank's advertised maximum, which may apply only to seniors or a special tenure. 3. Ask whether the rate is for general customers, seniors or super seniors, and whether it applies below or above ₹3 crore. 4. Confirm how interest is compounded and paid out — cumulative or periodic payout changes the cash you actually receive. 5. Remember tax: FD interest is taxed at your slab rate as it accrues, so the post-tax return is lower than the headline rate, especially in higher slabs.

Educational content only — not financial advice. Consult a SEBI-registered investment adviser for personal guidance; investments are subject to market risk. Sources: The Economic Times, 3 November 2026 (Bank of India deposit-rate hike; liquidity and CD rates); RBI Monetary Policy Committee resolution, 7 October 2026 (repo rate 5.50%, stance "calibrated tightening"); Business Today, 3 November 2026 (SBI Research flat-15% FD tax proposal, reported as a proposal only).