Bank of Baroda follows SBI, cuts savings rate by 50 bps

Within days of SBI slashing interest rate on savings bank account, another PSU bank - Bank of Baroda, has followed suit, cutting it to 3.5 per cent on deposits of up to Rs 50 lakh.

"We wish to inform you that it has been decided to introduce a 2-tier savings bank interest rate (from) August 5...," the bank said in a regulatory filing.

Effective tomorrow, the interest rate on savings bank balance of up to Rs 50 lakh has been reduced to 3.5 per cent from the current annual 4 per cent.

However, for balance above of Rs 50 lakh, the bank has retained the rate at 4 per cent.

On July 31, the country's largest lender State Bank of India had slashed interest rate on savings account deposits by 50 basis points to 3.5 per cent on balance of Rs 1 crore and below.

However, SBI continues to offer 4 per cent interest on savings account balance of Rs 1 crore and above.

More banks are likely to follow suit.