Axis Bank Cuts Savings Account Rate For Small Value Deposits
Axis Bank becomes fifth bank to bring down savings deposit rates
Private sector lender Axis Bank Ltd., on Tuesday, said that it will drop interest rates on savings account deposits up to Rs 50 lakh. Axis Bank follows State Bank of India and a handful of other lenders who have also reduced rates on savings accounts.
In a notification to the stock exchanges, the bank said that for savings deposits upto Rs 50 lakh, the bank will cut the interest rate by 50 basis points (bps) to 3.5 percent. For deposits over Rs 50 lakh, the bank will continue to offer 4 percent interest. The new interest rates will be effective immediately, the bank said.
Banks have been bringing down the interest rates on savings account deposits due to the excess liquidity available with them following demonetisation. The Reserve Bank of India (RBI) had deregulated the interest rates on savings account deposits in 2011. However, most large banks have kept interest rates steady till now.
Last week, lenders like SBI, Kotak Mahindra Bank, Bank of Baroda and Karnataka Bank, all announced interest rate cuts for some of their customers. While SBI reduced interest on savings deposits upto Rs 1 crore to 3.5 percent from 4 percent earlier, Bank of Baroda cut rates by 50 bps on savings deposit worth up to Rs 50 lakh.
Kotak Mahindra Bank did not reduce interest rates for a large portion of its savings accounts customers, but brought down the interest rates for savings deposits between Rs 1 crore to Rs 5 crore by 50 bps to 5.5 percent.
Karnataka Bank introduced a four tier interest rate structure for savings account deposits, on the basis of the value of these deposits. The interest rate on these deposits ranges between 3 percent to 5 percent.