Kotak Mahindra Bank Cuts Interest Rates On Savings Accounts For A Second Time In April
Kotak Mahindra Bank Ltd. has cut interest rates on savings deposits for the second time this month.
Effective April 20, Kotak Mahindra Bank’s savings account interest rate stands revised to Rs 4.5 percent per annum for daily balances above Rs 1 lakh and 3.75 percent for daily balances up to Rs 1 lakh, the private lender said in an email to customers Sunday.
The new interest rates are still 100 basis points more than what State Bank of India offers and 25-50 basis points over the industry average. SBI currently offers a flat 2.75 percent interest rate on all savings account deposits.
When contacted, a Kotak Mahindra Bank spokesperson said revision reflects falling interest rates scenario and will help manage better the cost of funds and pass on the benefit to borrowers.
Kotak Mahindra Bank was one of a handful banks—including Yes Bank, Indusind Bank, RBL Bank and DBS—to offer higher savings account interest rates that had peaked at 7 percent for the past many years. These banks were offering higher rates to bring down their cost of funds by increasing the low-cost current and savings accounts.
While banks like SBI and HDFC Bank Ltd. have very high CASA base of over 55 percent, the same is very low for these banks—in the mid-30s to early 40s.
A higher CASA helps banks bring down their cost of funds as a current account holder gets no interest on the balance in her account, but a savings account holder gets 3-3.5 percent on average at best.