Indian Bank Hikes Interest Rates on Special-Tenure Fixed Deposits

Public-sector lender Indian Bank has increased interest rates by 15 basis points on two of its special fixed deposit (FD) schemes, effective Friday, October 23, 2026. The revised rates apply to its 555-day Ind Grow and 777-day Ind Prosper deposits, offering customers higher returns. Following the revision, the annual interest rate for the 555-day Ind Grow deposit has been raised to 6.80% from 6.65%, while the 777-day Ind Prosper scheme now offers 6.75%, up from 6.60%. Interest rates on other listed tenures remain unchanged, according to Livemint Money.

This decision by Indian Bank follows the Reserve Bank of India (RBI) raising the repo rate by 25 basis points to 5.50% from 5.25% on October 7, marking the first such increase since February 2023. A repo rate hike increases the cost for banks to borrow money from the RBI, which can influence both lending and deposit rates across the financial system. Banks and non-banking financial companies (NBFCs) may revise their rates to manage funding costs, attract deposits, and maintain competitiveness.

For ordinary savers, these special deposits offer predictable returns, with Indian Bank providing additional benefits for senior citizens (0.5 percentage point) and super senior citizens (0.75 percentage point) over the general applicable rates. However, depositors should consider the deposit tenure, premature withdrawal rules, and tax implications before investing. Interest earned on FDs is subject to income tax as per the applicable slab, with tax deducted at source if the interest crosses ₹50,000 annually for general citizens or ₹1,00,000 for senior citizens.

Both Ind Grow and Ind Prosper are special-tenure schemes for those looking to invest for a fixed period. Premature withdrawals may be allowed for callable FDs, possibly with a penalty and interest recalculation based on the period invested, while non-callable FDs typically have stricter limits. Before investing, customers should check eligibility criteria and premature withdrawal rules on Indian Bank's official website or at a branch, and compare rates from various banks to ensure alignment with financial goals.

What to watch: The impact of future RBI monetary policy decisions on bank deposit rates.

Editor's note: Comprehensive coverage of the Indian Bank rate hike with all rates, dates, and background context included accurately.