India’s largest lender, ICICI Bank has cut the interest rate on savings accounts by 50 basis points. This rate cut is applicable on those accounts that have account balance below Rs 50 lakhs. Thus account holders of these accounts will get interests at a rate of 3.5% with effect from 19th August 2017. However, those accounts that have balance above Rs 50 lakhs will continue to get interests at a rate of 4%.
One of the major Public Sector Banks, Union Bank of India, has also reduced the interest rate on savings account by 50 basis points to 3.5% on account balance below Rs 25 Lakhs. Following other banks, it has also kept the interest rate at 4% on deposits above the mentioned limit.
Many banks have reduced interest rates after RBI made a rate cut of 25 basis points in the repo rate in the first week of August. The repo rate has fallen to a record low of 6% which has enabled banks to reduce interest rates on savings accounts. SBI had initiated the rate cut even before RBI announced the reduction in the repo rate. It has reduced interest rate to 3.5% on deposits below Rs 1 Crore.
Banks like HDFC, Axis Bank, Bank of Baroda and Indian Bank have reduced the interest rate on accounts having balance below Rs 50 Lakhs to 3.5%. Yes Bank has reduced interest rates by 1%. It now offers 5% on savings account with balance below Rs 1 Lakh whereas 6% is offered to account holders having account balance more than Rs 1 Lakh.