HDFC Bank Cuts Savings Interest Rate In Line With SBI
HDFC Bank follows SBI and others in bringing down the interest rate on savings deposits.
HDFC Bank, the country’s largest private lender by assets, has reduced the interest rate it pays on savings account deposits by half a percentage point. The bank follows State Bank of India and others in paring the cost it incurs on large balances in savings accounts, which form the low-cost deposit base for Indian lenders.
Effective August 19, HDFC Bank will offer 3.5 percent on savings account deposits of up to Rs 50 lakh compared to 4 percent earlier, the lender said in a press release on Thursday. Deposits higher than that will continue to earn 4 percent, it added.
Lower interest rates on savings accounts have followed a surge in deposits after demonetisation was announced in November 2016. While the initial expectation was that deposits would flow back out once withdrawal restrictions are lifted, a large chunk of this money has proved to be sticky. At a time when credit growth is moderate and liquidity is ample, banks have used this as an opportunity to bring down their cost of deposits.
The country’s largest lender SBI was the first to reduce the interest rate on savings deposits worth Rs 1 crore and below to 3.5 percent from 4 percent earlier. Axis Bank too said that it will offer 3.5 percent interests on savings accounts worth Rs 50 lakh and below compared with 4 percent earlier. ICICI Bank is yet to announce any change in rates.
Other lenders like Bank of Baroda and Karnataka Bank also reduced the interest rates on some savings account deposits.
Among the newer private banks, Yes Bank said on Wednesday that it will offer 5 percent on savings deposits worth Rs 1 lakh and less, as compared with 6 percent earlier, it said in a notification to stock exchanges. For deposits between Rs 1 lakh and Rs 1 crore, it will continue to offer 6 percent. For deposits worth Rs 1 crore and above, Yes Bank will offer 6.25 percent, down from 6.5 percent earlier.
Kotak Mahindra Bank said that it will hold its interest rate for its low-value deposit holders, while reducing the interest rates on savings deposits of Rs 1-5 crore.
