When will RBI Governor Sanjay Malhotra's expected deposit rate moderation occur?

Governor Malhotra expects deposit rates to moderate in line with lending rates going forward, particularly after recent repo rate cuts.

How have RBI's repo rate cuts impacted bank deposit rates?

RBI's 100 bps cut in the policy repo rate has led to a 105 bps decline in the weighted average domestic term deposit rate on fresh deposits.

Are bank deposit rates expected to fall further, according to bankers?

Bankers indicate that deposit rates have already moderated significantly, and the scope for further reduction appears limited.

Home / Business and Economy / RBI Governor: Deposit Rates to Follow Lending Rates Down

RBI Governor: Deposit Rates to Follow Lending Rates Down

5 Dec

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Summary

RBI expects deposit rates to moderate, mirroring falling bank lending rates.
Real interest rates are currently high due to low inflation, benefiting savers.
Deposit rates have already seen a 105 bps decline on fresh deposits.

RBI Governor: Deposit Rates to Follow Lending Rates Down

Reserve Bank of India Governor Sanjay Malhotra indicated that deposit rates are expected to soften, following the trend of moderating bank lending rates. He emphasized that with inflation remaining low, real interest rates are currently quite high, benefiting both borrowers and savers.

This expectation comes as RBI data reveals a substantial 105 basis point decrease in the weighted average domestic term deposit rate on fresh deposits since February 2025. Simultaneously, lending rates have also seen a decline, with weighted average lending rates falling by 69 basis points for new loans and 63 basis points for outstanding loans.

Bankers, however, suggest that deposit rates have already experienced significant moderation. While the Reserve Bank's policy committee will decide on future adjustments, the scope for further reductions in deposit rates appears limited, considering the need to protect depositors' interests.