HDFC Bank cuts saving account interest rate, now offers 2.75 per cent

HDFC Bank has reduced its savings account interest rate by 25 basis points to 2.75 per cent for balances below Rs 50 lakh, effective April 12. This new rate is the lowest among private sector banks.

  For balances above Rs 50 lakh, the interest rate has been lowered to 3.25 per cent, down from 3.5 per cent. The decision follows the Reserve Bank of India's recent repo rate cut by 25 basis points.

 

HDFC Bank's peers like ICICI Bank and Axis Bank are both currently offering 3 per cent minimum interest rate on balances below Rs 50 lakh.

 

What is a savings account interest rate?

 

“A Savings Account interest rate refers to the percentage of interest that a bank pays for the amount deposited in the savings account. In your savings account, you can deposit and withdraw funds, at any time. Therefore, you will keep earning interest so long you have funds in the account,” according to the company website.  ALSO READ | Bank of India cuts interest rates on short and medium-term FDs

 

How is the interest on a savings account calculated?

 

The interest on your savings account is calculated based on the daily closing balance in your account, per the Reserve Bank of India (RBI) regulations.

 

The formula for calculating the interest on a savings account is as follows:

 

Savings account interest = daily account balance x savings account interest rate x number of days/365 (days in a year).

 

For instance, if your account balance today is Rs 50,000 and interest rate is 3.00 per cent, then your interest earned for one day will be:

  50,000 x (3.00/100) x (1/365) = Rs 4

 

If you maintain Rs 50,000 for 30 days, the interest earned after 30 days will be 50,000 x (3.00/100) x (30/365) = Rs 123.28. TDS as per applicable rates gets deducted in case of NRO/RFC account.

 

Earlier, HDFC Bank had reduced fixed deposit rates by 35-40 basis points for select tenures starting April 1 in anticipation of a rate cut.

  Recently, Canara Bank has reduced fixed deposit interest rates by up to 20 bps on select tenures for deposits below Rs 3 crore. According to the bank’s website, the revised rates are effective from April 10. Following the adjustment, the bank now offers interest rates ranging from 4 per cent to 7.25 per cent for the general public and between 4 per cent and 7.75 per cent for senior citizens on callable deposits.

 

Bank of Baroda has introduced a new fixed deposit option called the ‘bob Square Drive Deposit Scheme’. The updated FD interest rates, including the new scheme, came into effect on April 7 and apply to deposits of less than Rs 3 crore. Meanwhile, the bank has also withdrawn its special Utsav Deposit Scheme.