- Savings bank account balance below Rs 50 lakh to earn 3.5% interest
- Balance of Rs 50 lakh and above to continue to earn 4%, says HDFC Bank
- Revised rates applicable to resident, non-resident customers, it adds
HDFC Bank is the latest lender to lower savings account deposit rate after SBI or State Bank of India, the country's largest lender, on July 31, 2017 introduced a new two-tier savings account interest rate system, reducing interest rates for most of its depositors. On balances below Rs 1 crore, SBI lowered the interest rate to 3.5 per cent from 4 per cent. On balances above Rs. 1 crore, it continued to offer the rate of 4 per cent. After SBI's move, many lenders including Axis Bank, Bank of Baroda, Indian Bank and Yes Bank cut their interest rates on savings accounts. In 2011, the Reserve Bank of India (RBI) had freed savings bank deposit rates. Credit rating firm India Ratings believes that the beginning of reduction in savings bank rates by commercial banks will spur a new competition among them.
India Ratings believes that with the interest rate cycle reaching the bottom, downward repricing of existing liabilities (savings account rate cut) could facilitate a further reduction in lending rates.