Axis Bank cuts savings deposit rate by 25 basis points, effective April 15

HDFC Bank had earlier revised savings deposit rates by 25 bps; ICICI Bank yet to cut savings deposit rates

Axis Bank, the country’s third largest private sector lender, has trimmed its savings account interest by 25 basis points (bps), effective April 15.

 

According to the bank’s website, the bank is offering an interest rate of 2.75 per cent per annum on deposits of up to ₹50 lakh, while deposits above ₹50 lakh and up to ₹2,000 crore will earn an interest rate of 3.25 per cent per annum. For deposits exceeding ₹2,000 crore, the interest rate is linked to the overnight Mumbai Interbank Offered Rate (MIBOR) plus 70 basis points.

 

Axis Bank’s shares closed 4.18 per cent higher at ₹1,114.05 on the BSE on Tuesday, as the reduction in savings deposit rates is likely to be margin accretive for the bank in the current quarter (Q1FY26).

 

This move by Axis Bank comes after HDFC Bank, country’s largest private sector lender, earlier this week, revised interest on savings account by 25 bps to 2.75 per cent from 3 per cent for deposits upto Rs 50 lakh. For balances over Rs 50 lakh, the bank is offering an interest of 3.25 per cent, effective April 12.

 

HDFC Bank’s shares closed 3.23 per cent higher at ₹1,864. 90 on the BSE, following its decision to trim interest rate on savings account deposits as analysts termed this a “brave move” by the bank.

 

According to a Macquarie Capital report, the 25 bps reduction in savings deposit rate will add 5 bps to the banks’ margin in April – June quarter (Q1FY26). Share of savings deposits has come down from a peak level of 33 per cent seen 3 years ago to 24 per cent currently (merger impact has been ₹300bps) for HDFC Bank.

 

Meanwhile, ICICI Bank, country’s second largest private sector lender, is yet to cut interest rate on its savings deposit and is still offering 3 per cent interest rate for deposits upto ₹50 lakh, and 3.50 per cent on deposit above ₹50 lakh.

 

State Bank of India (SBI), country’s largest lender, already offers a lower savings deposit rate of 2.7 per cent per annum for balances of upto ₹10 crore. For deposits above ₹10 crore, the bank offers 3 per cent per annum, effective October 2022.

 

Analysts are expecting more banks to follow suit in cutting interest rates on savings account deposits. This follows the Reserve Bank of India (RBI) reducing policy rate by 50 bps in two successive monetary policy meetings.

 

“HDFC Bank already had room to cut, considering its largest competitor was offering 30bps lower. We expect more banks to cut savings deposit rates in coming quarters,” stated a report by Macquarie Capital, adding that the savings deposit rate was cut to add ₹5bps to the margins from Q1FY26 onwards.

 

Savings accounts are more transactional and, of late, depositors have been moving deposits to term deposits, as rates offered are much higher (₹7 per cent). An additional 25bps reduction may not necessarily further incentivise depositors to move to term deposits, the report further said. It added that since SBI is already offering 2.7 per cent, and with others likely to follow HDFC Bank, the relative market share will not change meaningfully.