Top public sector and private lenders have been slashing interest rates on savings bank accounts. A fall in the rate of inflation and surplus money with banks on account of demonetisation are the primary reasons for these cuts. "The profitability levels of Indian banks remains weak owing to the continued pressure on asset quality and low credit demand. It would be imperative for banks with adequate capitalisation to start gaining market share over weaker peers which are starved for capital," credit ratings agency India Ratings said.
Here are seven banks which have slashed their interest rates on savings bank accounts:
1. State Bank of India (SBI): The country's largest lender kick-started the rate-cutting spree on July 31 as it 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 a rate of 4 per cent.
2. Bank of Baroda: It was the next to follow suit. Bank of Baroda also adopted a two-tier savings bank interest rate from August 5, it said in a regulatory filing. The interest rate on savings bank balance of up to Rs 50 lakh was reduced to 3.5 per cent from the current 4 per cent. However, for balance above Rs 50 lakh, the bank retained the rate at 4 per cent.
3. Axis Bank: The private sector lender reduced interest rate on savings bank accounts by 0.5 per cent to 3.5 per cent for deposits up to Rs 50 lakh. However, the bank will continue to pay 4 per cent interest on deposits of above Rs 50 lakh.
4. Indian Bank: The PSU lender now offers interest rate of 4 per cent per annum on savings account with incremental balance of over Rs 50 lakh and 3.50 per cent per annum for deposits up to Rs 50 lakh.
5. Karnataka Bank: For daily balance in the range of more than Rs 1 lakh to Rs 50 lakh, the bank reduced the interest rate to 3.5 per cent from the existing 4 per cent and for balances below Rs 1 lakh, the revised rate is now 3 per cent from the existing 4 per cent. However, for daily balances of above Rs 1 crore, the interest rate was revised to 5 per cent per annum from the existing 4 per cent, whereas for daily balances of Rs 50 lakh to Rs 1 crore, the applicable interest rate is now 4 per cent per annum.
6. Yes Bank: Yes Bank on Wednesday reduced the interest rate on savings bank accounts by 1 per cent to 5 per cent for deposits of less than Rs 1 lakh. However, the bank will continue to pay 6 per cent interest on deposits of over Rs 1 lakh and less than Rs 1 crore. The bank has also slashed interest rate on savings accounts to 6.25 per cent from existing 6.5 per cent for deposits over Rs 1 crore.
7. HDFC Bank, India's No.2 lender by assets, on Thursday announced a cut in interest rate on savings account deposits. Customers maintaining an account balance below Rs. 50 lakh will now earn interest at the rate of 3.5 per cent per annum. Customers maintaining a savings bank account balance of Rs. 50 lakh and above will continue to earn interest at 4 per cent. The revised rates will be applicable to both resident and non-resident customers, HDFC Bank said. The new rates will be effective from August 19, 2017.
8. Punjab National Bank: PNB on Thursday reduced interest rates on fixed deposits of less than Rs 1 crore by 15-40 basis points on select maturities. Interest rate on savings bank account for balance up to Rs 50 lakh has been reduced to 3.50 percent per annum, PNB said in a statement.
(With PTI Inputs)