India's number second lender by assets, HDFC noted that post revision, customers maintaining savings bank account balance of Rs. 50 lakh and above will continue to earn interest at four percent per annum, while those with balance lower than the aforementioned amount will earn an interest rate of 3.5 percent per annum. The bank would pay interest of 5 per cent on balance above Rs 1 crore. Under the new structure, the interest rate revision impact on customers with lower balance is negligible while the saving bank accounts with higher balance will attract higher interest.
On 31 July, State Bank of India slashed interest rate on savings account deposits by 50 bps to 3.5% on balance of Rs1 crore and below. If the daily balance were to be below Rs 1 lakh, the rate offered by the bank is now only 3%, a change from the earlier 4%. For deposits of or above Rs 1 crore, the bank has reduced the interest rate from 6.5% to 6.25%. Smaller banks are likely to keep their rates unchanged in an effort to garner more market share.
Digital Payments Banks are still offering lucrative interest rates on deposits with them. The numbers of rate cut, rate offered and applicable deposit limits were the same as Bank of Baroda. However, the 6% rate will remain for the over Rs 1 lakh to below Rs 1 crore deposit bracket. The interest rate has been reduced by 1 per cent from 4 per cent, Karnataka Bank said in a statement.
Market participants believe that the interest rate war will stay between large public-sector and private-sector banks. Until now seven banks including SBI have reduced their return on savings accounts.