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In the wake of the Reserve Bank of India's (RBI) recent decision to lower the repo rate by 25 basis points to 6 per cent, several prominent banks have adjusted their savings account interest rates downward. This move aims to align with the central bank's accommodative monetary policy stance and to manage operational costs amid a slowing economy.
Reasons behind the rate cuts
The RBI's rate reduction is a response to easing inflation, which stood at 3.34 per cent in March 2025—the lowest in over five years—primarily due to declining food prices. By lowering the repo rate, the RBI intends to stimulate economic growth by making borrowing more affordable.
Banks, in turn, are adjusting their deposit rates to maintain healthy profit margins. For instance, HDFC Bank recently cut its savings deposit rates by 25 basis points, a move expected to boost its net interest margins . Similarly, Federal Bank has implemented a 25 basis point reduction in its savings account interest rates.
Current savings account interest rates
Here's an overview of the revised savings account interest rates offered by various banks:
Private sector banks:
HDFC Bank: 2.75 per cent p.a. for balances below Rs 50 lakh; 3.25 per cent p.a. for Rs 50 lakh and above.
ICICI Bank: 2.75 per cent p.a. for balances up to Rs 50 lakh; 3.25 per cent p.a. for higher amounts.
Axis Bank: 2.75 per cent p.a. for balances below Rs 50 lakh; 3.25 per cent p.a. for Rs 50 lakh and above.
Public sector banks:
State Bank of India (SBI): 2.70 per cent p.a. for balances below Rs 10 crore; 3.00 per cent p.a. for higher amounts.
Bank of India: 2.75 per cent p.a. for balances up to Rs 500 crore; 3.00 per cent p.a. for balances above Rs 500 crore and up to Rs 1,000 crore.
Small finance banks:
Suryoday Small Finance Bank: 2.50 per cent p.a. for balances up to Rs 1 lakh; up to 7.75 per cent p.a. for higher balances.
Ujjivan Small Finance Bank: Offers up to 7.50 per cent p.a. on savings accounts.
AU Small Finance Bank: Interest rates up to 7.00 per cent p.a. depending on the balance.
Implications for investors
While the reduced interest rates may impact returns on traditional savings accounts, investors have alternatives to consider. Fixed deposits, recurring deposits and other investment instruments may offer higher yields. It's essential for investors to assess their financial goals and risk appetite before reallocating funds.
Despite the rate cuts, savings accounts continue to provide liquidity and safety, making them suitable for emergency funds and short-term financial needs.
Note: Interest rates are subject to change. Please consult the respective banks for the most current rates. This article was composed with the assistance of artificial intelligence. While we've taught our digital scribe to behave, we still recommend a pinch of healthy scepticism alongside your reading. Enjoy-and proceed with a knowing smile!
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