7 top Banks that have cut interest rates on savings bank accounts
A number of public and private banks have cut interest rates on most of its savings accounts to 3.5 per cent from 4 per cent.
As many as seven banks have announced a rate cut on saving bank interest rate till now mainly due to the fall in the rate of inflation and surplus money, thanks to demonetisation.
Lenders such as HDFC, Yes Bank Ltd, Bank of Baroda, Indian Bank, Karnataka Bank, Axis Bank Ltd have cut interest rates on certain savings accounts.
State Bank of India had cut deposit rates on most of its savings accounts to a six-year low last month to boost net interest margins, prior to the interest rate cut by the Reserve Bank of India.
After cutting the rates, SBI had explained in a statement: "The decline in the rate of inflation and high real interest rates are the primary considerations warranting a revision in the rate of interest on savings bank deposits," adding that the bank had reduced the marginal cost of funds-based lending rate by 90 basis points from the turn of 2017 on account of huge inflow of money in savings and current accounts due to demonetisation.
Due to the drop in inflation, the real interest increased substantially in the past after inflation dropped to a record low of 1.54% in June. This seemed to lay the ground for the rate cut.
Here's a list of banks which have cut savings bank interest rates till now
State Bank of India (SBI): State Bank of India on 31st July cut its interest rate on savings bank accounts by 50 basis points to 3.5 percent on deposits of up to Rs 1 crore. The rate offered on deposits above Rs 1 crore remains at 4%.
Bank of Baroda: Soon, Bank of Baroda followed the suit. The rate offered on deposits up to Rs 50 lakh was cut from 4% to 3.5%. The rate above Rs 50 lakh was not changed.
Karnataka Bank: The bank now offers three percent on saving accounts with deposits up to Rs 1 lakh. For deposits between Rs 1 lakh and Rs 50 lakh, the rate is pegged at 3.5 percent. And, for deposits above 50 lakh, the 4 percent rate is retained.
Axis Bank: Axis Bank was the first private bank to follow SBI's move.The rate was cut by 50 basis points to 3.5 per cent for deposits up to Rs 50 lakh. The bank continues to pay four per cent interest on deposits of above Rs 50 lakh.
Indian Bank: The PSU lender has introduced two tier interest rate structure for saving bank accounts and will offer 4 per cent interest per annum for incremental balance over Rs. 50 lakh and 3.50 per cent per annum for balance up to Rs. 50 lakh".
Yes Bank: Private sector lender reduced the interest rate on savings bank accounts by 1 per cent to 5 percent for deposits of less than Rs 1 lakh.However, the 6% rate will remain for the over Rs 1 lakh to below Rs 1 crore deposit bracket.
HDFC Bank: HDFC slashed rates for savings bank account balance below Rs 50 lakh to 3.5% per year. Customers with savings bank account balance of Rs 50 lakh and above will continue to earn interest at 4 percent per annum.