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Banks in the country are on a spree to slash savings interest rates. As many as seven banks have announced a rate cut on saving bank interest rate till now mainly due to the fall in the rate of inflation and surplus money, thanks to demonetisation.
Here's a list of banks which have slashed the savings bank interest rates till now:
State Bank of India (SBI): The country’s largest lender State Bank of India on 31st July cut its interest rate on savings bank accounts by 50 basis points to 3.5 percent on deposits of up to Rs 1 crore. However, the bank will keep offering an interest rate of 4 percent on deposits more than Rs 1 crore.
"SBI had to cut saving interest rates as real interest rate was very high. We had two options; either to raise MCLR or cut savings bank interest rates," Rajnish Kumar, MD of SBI had said.
Also Read: Why did State Bank of India cut interest rate on savings account deposits?
Bank of Baroda (BoB): Within days of SBI slashing interest rate on savings bank account Bank of Baroda followed suit, cutting it to 3.5 percent on deposits of up to Rs 50 lakh. BoB has kept the interest rates for deposits exceeding Rs 50 lakh at 4 percent.
Watch | RBI Credit Policy: How Interest Rates Work
Karnataka Bank: The Mangalore-headquartered bank was the third one to tweak the rates. The bank now offers three percent on saving accounts with deposits up to Rs 1 lakh. For deposits between Rs 1 lakh and Rs 50 lakh, the rate is pegged at 3.5 percent. And, for deposits above 50 lakh, the 4 percent rate is retained.
Axis Bank: Axis Bank was the first private bank to reduce its interest rate on savings bank accounts. The rate was cut by 50 basis points to 3.5 per cent for deposits up to Rs 50 lakh. The bank continues to pay four per cent interest on deposits of above Rs 50 lakh.
Indian Bank: The PSU lender tweaked the rates to offer 3.5 percent on deposits up to Rs 50 lakh. For accounts having an amount in excess of Rs 50 lakh, the interest rate will be 4 percent.
Yes Bank: Private sector lender Yes Bank on Wednesday reduced the interest rate on savings bank accounts by 1 per cent to 5 percent for deposits of less than Rs 1 lakh.
However, the bank said it will continue to pay 6 percent 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 percent from existing 6.5 percent for deposits over Rs 1 crore.
HDFC Bank: The bank on Thursday cut interest rates for most of its savings accounts to 3.5 percent from 4 percent. Customers with savings bank account balance of Rs 50 lakh and above will continue to earn interest at 4 percent per annum. These changes shall be effective from August 19, 2017.
Watch | Going Cashless: Challenges and Benefits
Options for customers
As saving accounts with large banks are getting less attractive due to cuts in interest rates, it is logical to look for a better alternative. Here are some options you can consider for better savings:
Accounts with small banks
Market participants believe that the interest rate war will stay between large public-sector and private-sector banks. Smaller banks are likely to keep their rates unchanged in an effort to garner more market share. You can take benefit of it and move your account to any of the small banks close to you.
Banks like RBL Bank and Bandhan Bank still maintain savings account interest rates as high as 7 percent on deposits.
Also Read: Worried about savings rate cut? Soon you may be able to port your bank account
Digital Payments Banks
Digital Payments Banks are still offering lucrative interest rates on deposits with them. There are currently three payments banks in operation— India Post, Paytm and Airtel. According to Reserve Bank of India, few other institutions have been given the license but have not started their operations, such as Jio Payments Bank, NSDL Payments Bank and FINO Payments Bank.
Airtel is offering the highest interest rates among the functioning payments banks. It offers an interest rate of 7.25 percent on deposits in savings accounts. Additionally, it also provides personal accidental insurance of Rs 1 lakh with every savings account and free money transfers between Airtel-to-Airtel accounts.
Also Read: Here’s how payments banks will make money without lending
The India Post Payment Bank offers an interest rate of 4.5 percent on deposits up to Rs 25,000; 5 percent on deposits of Rs 25,000- Rs 50,000 and 5.5 percent on Rs 50,000-Rs1,00,000.
Also Read: Paytm launches payments bank – what will happen to your e-wallets?
Paytm is offering a 4 percent annual interest rate and cash-backs on deposits, much less than its competitors.
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