New Delhi Feb 23, 2026: The Reserve Bank of India (RBI) announced its Monetary Policy decision on February 6, 2026, keeping the repo rate unchanged at 5.25%. The Monetary Policy Committee (MPC) maintained a neutral stance, indicating a data-dependent approach going forward.

The current policy setting follows earlier rate adjustments over the past year. According to official projections, inflation remains moderate (FY26 estimate around 2%–2.1%), while economic growth expectations have been placed near 7.4% for FY26. The policy statement also referenced ongoing monitoring of global and domestic developments.

With policy rates currently steady, the broader interest rate environment appears relatively stable as of late February 2026.

Economic Snapshot – Late February 2026

Repo Rate: 5.25%
Standing Deposit Facility (SDF): 5.00%
MSF / Bank Rate: 5.50%
Inflation Outlook: Moderate, as per official projections
Growth Outlook: Stable, with positive domestic momentum
Bond Market: Yields largely steady
FD Rates: Broadly stable across most banks

In this environment, fixed-income instruments such as Fixed Deposits (FDs) and Debt Mutual Funds remain commonly evaluated options for surplus allocation.

Also Read: Latest FD Rates 2026: SBI, PNB, ICICI, BoB, Canara Bank & HDFC, Axis After RBI Repo Rate Pause

Fixed Deposits vs Debt Mutual Funds

February 2026 Overview

Parameter	Fixed Deposits (FDs)	Debt Mutual Funds
Nature of Returns	Fixed and predetermined at the time of booking	Market-linked; dependent on portfolio yields and interest rate movements
Typical Yield Range	~6%–7.9% p.a. (higher slabs in select small finance banks); senior citizens typically receive an additional 0.5%–0.85%	Many corporate bond and short-duration categories have shown trailing 1-year returns in the 7%–10% range (subject to change)
Risk Profile	Low; covered under DICGC insurance up to ₹5 lakh per depositor per bank	Low to moderate; subject to interest rate risk and limited credit risk; no guaranteed returns
Liquidity	Premature withdrawal allowed with penalty (usually 0.5%–1%)	Typically T+1 or T+2 redemption; some schemes may carry exit loads
Tax Treatment	Interest taxed at slab rate; TDS applicable above prescribed limits	Gains taxed at slab rate (as per prevailing tax rules); no indexation benefit
Volatility	No NAV fluctuation	NAV may fluctuate based on bond yields

Fixed Deposits: Key Characteristics

Interest rate is fixed at the time of investment
Suitable for defined time horizons
No market-linked volatility
Senior citizen additional interest benefit available
Deposit insurance available as per DICGC guidelines

FD rates across PSU, private, and small finance banks currently range between approximately 6% and 8%, depending on tenure and category.

Debt Mutual Funds: Key Characteristics

Invest in government securities, corporate bonds, or money market instruments
Returns are influenced by interest rate movements and accrual income
Higher liquidity compared to traditional FDs
NAV may fluctuate in the short term
No capital guarantee

Categories commonly tracked include corporate bond funds, short-duration funds, and dynamic bond funds.

Allocation Considerations in a Stable Rate Environment

With policy rates steady:

Fixed Deposits provide predictable accrual at currently available rates
Debt Mutual Funds reflect ongoing yield accrual from bond portfolios
Interest rate movements may influence debt fund performance in future periods

Investment decisions typically depend on:

Investment horizon
Liquidity requirements
Risk tolerance
Tax bracket
Overall asset allocation strategy

Important Information

Interest rates and fund yields are subject to change.
Debt mutual fund returns are not guaranteed and may fluctuate.
Deposit insurance is applicable as per prevailing DICGC regulations.
Investors are advised to review official bank websites and AMFI/fund house disclosures for updated data.
This content is for informational purposes only and should not be construed as financial advice.

Conclusion

As of late February 2026, the interest rate environment remains stable following the RBI’s policy decision. Both Fixed Deposits and Debt Mutual Funds continue to serve different roles within fixed-income allocation frameworks. The appropriate choice varies based on individual financial objectives and risk preferences.

Disclaimer: The information provided in this article is for informational purposes only. FD rates, Mutual Funds and schemes have been collected from publicly available sources, including bank websites and Google search. Readers are advised to verify details with the respective banks before making any investment decisions. The publisher is not responsible for any errors or financial losses.