Certificates of deposit rates have experienced a significant decline following the Reserve Bank of India's measures to attract foreign inflows. According to reports from Business Standard, the three-month CD rate fell 67 basis points between June 5 and June 16 to 6.58 per cent from 7.25 per cent. Rates on one-month and two-month CDs declined by 60 basis points and 62 basis points, respectively, while the 12-month tenor eased 34 basis points during the same period. Market participants have begun pricing in an improvement in durable liquidity conditions as the measures are expected to bring sizeable foreign-currency inflows into the banking system over the coming months.
State-owned banks have launched new deposit schemes to capitalize on the RBI's liquidity measures. Canara Bank announced a Foreign Currency Non-Resident (Bank) [FCNR(B)] Special Deposit Scheme offering up to 6.5 per cent per annum on US dollar deposits with tenures ranging from three to five years and a one-year lock-in period. The scheme became effective from June 11, 2026, with both principal and interest repatriable without restrictions and tax-exempt in India. Separately, Bank of Baroda launched the 'bob Golden Goal Deposit Scheme' offering up to 7.4 per cent per annum on deposits with 555-day tenure, applicable to retail deposits below ₹3 crore. The scheme provides differentiated rates for different customer segments, with super senior citizens aged 80+ receiving 7.40 per cent for non-callable deposits.
The RBI's measures are anticipated to generate substantial foreign-currency inflows into the banking system. As reported by Business Standard, foreign inflows through FCNR(B) deposits and external commercial borrowings could amount to $60 billion-$70 billion, easing funding pressures and reducing reliance on domestic money-market borrowings. A treasury head at a private bank noted that the impact can be seen in short-term rates, with CD rates expected to decline further as FCNR(B) inflows should strengthen banks' liability profiles and ease incremental credit-deposit pressures.
According to a report by India Ratings and Research (Ind-Ra), certificates of deposit worth ₹3.15 trillion are scheduled to mature between June and August, with public sector banks accounting for nearly 60 per cent of the maturities. CD issuances had risen to ₹1.11 trillion in May from ₹46,000 crore in April, driven largely by public sector banks. However, dealers said expectations of stronger liquidity and lower funding costs have reduced the urgency for aggressive borrowing in the short-term market.
As reported by India Ratings, CD issuances are expected to moderate, contributing to some easing in short-term rates in Q2FY27. However, this easing is expected to be measured, with rates declining 30 basis points to 50 basis points across tenors. The rating agency noted that rates declining 30 bps-50 bps across tenors is expected as inflation risks and underlying demand for funds are likely to limit any sharp correction. Money-market participants expect the trajectory of CD rates to depend on the pace of foreign-currency inflows and liquidity absorption by the banking system, although the near-term bias remains downward.
