ICICI Bank joins top peers, cuts rate for savings accounts by 25 bps

Savings account balances of up to Rs 50 lakh will now earn an interest rate of 2.75%: ICICI

ICICI Bank, the country’s second largest private sector lender, on Wednesday cut its interest rate for savings accounts by 25 basis points (bps), joining other lenders in taking such a measure after the Reserve Bank of India (RBI) on April 9 reduced the repo rate to 6 per cent.

 

The country’s top three private banks, HDFC Bank, ICICI Bank and Axis Bank, have lowered their savings account rates by the same margin.

 

According to ICICI Bank’s website, savings account balances of up to Rs 50 lakh will now earn an interest rate of 2.75 per cent, down from 3 per cent earlier. Balances above Rs 50 lakh will attract an interest rate of 3.25 per cent, compared to 3.50 per cent earlier.

 

Earlier this week, HDFC Bank and Axis Bank reduced their savings deposit rates by 25 bps to 2.75 per cent. The three lenders now offer 2.75 per cent interest on savings account balances of up to Rs 50 lakh.

 

State Bank of India (SBI), the country’s largest lender, already offers a lower savings deposit rate of 2.7 per cent per annum for balances of up to Rs 10 crore. For deposits above Rs 10 crore, SBI offers 3 per cent per annum, a rate that has been in effect since October 2022.

 

The latest round of rate cuts on savings deposits follows the RBI’s move to lower the policy repo rate by a cumulative 50 basis points since February, across two successive monetary policy meetings. The repo rate now stands at 6 per cent, down from 6.5 per cent earlier.

 

Analysts believe the reduction in savings deposit rates will be margin accretive for banks in the April-June quarter. They also expect more lenders to follow suit.

 

Savings accounts are more transactional in nature and lately many depositors have shifted funds to term deposits, which offer significantly higher returns – of around 7 per cent.