Several major banks in India have recently cut their savings account interest rates by 25 basis points (0.25%) following the Reserve Bank of India’s (RBI) recent reduction in the repo rate.
HDFC Bank has lowered its savings account interest rate to 2.75% for balances up to Rs 50 lakh. For balances above Rs 50 lakh, the interest rate has been reduced to 3.25%, down from 3.5%. This is HDFC Bank’s first cut in savings rates in over five years.
ICICI Bank and Axis Bank have also followed suit, cutting their savings account rates by the same margin. Now, ICICI Bank offers 2.75% interest for balances below Rs 50 lakh and 3.25% for higher balances. These moves bring private banks closer to the State Bank of India’s savings rate of 2.7% for similar balances.
In addition to savings account rate cuts, Bank of India has reduced its home loan interest rates by 25 basis points, bringing the rate down to 7.90%. The bank has also withdrawn its special 400-day fixed deposit scheme, which offered an interest rate of 7.30%.
These changes reflect banks’ efforts to pass on the benefits of RBI’s repo rate cut to customers while managing their own funding costs. Lower interest rates on savings accounts may reduce returns for depositors but help banks improve their profitability amid a softer interest rate environment.
Borrowers with floating-rate loans, especially home loans, will benefit from reduced EMIs due to the lower lending rates linked to the repo rate. Overall, these adjustments signal a gradual transmission of RBI’s monetary policy easing to the banking sector and customers.