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Chandigarh: In a strategic move aimed at realigning its deposit schemes with evolving market conditions, Bank of India (BOI), one of the country’s premier public sector banks, has revised interest rates on its Green Deposit and Savings Deposit accounts, effective July 7, 2025.
This rationalization comes in the wake of the Reserve Bank of India’s recent decision to adjust the repo rate, influencing the broader financial ecosystem. BOI’s latest initiative reflects its commitment to proactive rate alignment, seamless policy rate transmission, and ensuring a stable balance between deposit inflows and credit growth.
Green Deposit Interest Rate Revised to 6.70%
One of the most notable changes is the downward revision in the interest rate for the Green Deposit, a sustainable banking initiative aimed at encouraging environmentally responsible investments.
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The interest rate has been reduced from 7.00% p.a. to 6.70% p.a.
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This rate applies to deposits of ₹1 lakh to less than ₹10 crore.
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The tenure for the Green Deposit remains fixed at 999 days.
BOI’s Green Deposit, launched as part of its Environmental, Social, and Governance (ESG) framework, was designed to cater to customers who seek both attractive returns and eco-conscious investment avenues. With the latest revision, the Bank is positioning the product as market-competitive while staying committed to its sustainability goals.
Savings Deposit Rate Adjusted for Lower Slab
In addition to changes in the Green Deposit, BOI has revised its Savings Deposit rate for accounts with balances up to ₹1 lakh:
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The interest rate is reduced from 2.75% p.a. to 2.50% p.a.
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All other slabs and rates for savings deposits remain unchanged.
This step reflects a broader industry trend among Indian banks, which have been adjusting their retail deposit rates in tandem with central bank policy cues. The recalibration ensures optimal management of interest rate risk, liability costs, and profitability margins.
Balancing Deposits and Advances: A Policy-Driven Strategy
A senior official from Bank of India emphasized that the rationalization is part of a calibrated strategy to ensure equilibrium between deposit and lending rates.
“This move is designed to balance our cost of funds while maintaining attractive rates for customers. In view of the recent changes in policy rates, we’re making our offerings more aligned with current financial realities,” the official said.
Banks, especially public sector institutions, are under increasing pressure to ensure efficient monetary transmission. This means promptly adjusting deposit and lending rates in line with repo rate movements so that monetary policy decisions reflect effectively in the real economy.
What It Means for Customers
While the cut in rates may result in marginally lower returns for depositors, especially those in the lower savings bracket, the Bank has ensured that rates remain competitive and in sync with peers. For customers focused on sustainable investing, the Green Deposit continues to be an attractive long-term option with relatively higher returns compared to standard deposits.
Moreover, the rate change comes at a time when inflation pressures are being closely monitored, and banks are aligning their pricing structures for both deposits and loans. Customers can expect stable and predictable returns even after the rationalization, along with the safety and trust associated with a major PSU bank.
Broader Market Context
The Reserve Bank of India’s stance on liquidity and inflation control has prompted several banks to revisit their deposit and lending rates. With repo rates witnessing a revision, the impact is visible across savings instruments and credit products.
Public sector banks like Bank of India are strategically aligning with the policy transmission mechanism, facilitating smoother capital flow and aiding overall economic growth. By fine-tuning deposit rates, BOI is also preparing itself to manage credit demand, cost of funds, and treasury operations more effectively.
BOI’s Forward-Looking Approach
Bank of India’s move highlights its data-driven and forward-looking approach to interest rate management. As part of its broader transformation strategy, the bank is working toward:
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Enhancing digital banking capabilities
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Promoting ESG-linked products
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Offering competitive financial solutions in a changing interest rate landscape
The Green Deposit, in particular, reinforces BOI’s support for India’s climate finance objectives and sustainable development goals (SDGs).
Conclusion
Bank of India’s rationalization of interest rates on Green and Savings Deposits is a strategic response to changing market dynamics and monetary policy cues. By ensuring its offerings are both competitive and sustainable, the bank continues to build on its legacy of trust, customer service, and financial resilience.
As interest rates shift in the broader economy, depositors are advised to review their investment strategies, explore long-tenure deposit options like the Green Deposit, and monitor further policy changes that could influence savings returns.
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