HDFC Bank cuts savings account interest rate to 3.5%, stock closes lower

BT Online        Last Updated: August 17, 2017  | 16:11 IST
HDFC Bank cuts savings account interest rate to 3.5%, stock closes lower

Private sector lender HDFC Bank on Thursday joined the long list of lenders led by the State Bank of India which have cut interest rates on savings bank accounts.  

Bank of Baroda, Axis Bank, Karnataka Bank and YES Bank have already reduced interest rates on their savings bank accounts. 

HDFC Bank is the sixth lender to cut savings account interest rate after market leader State Bank of India (SBI) begun the process of reducing the interest rate.

On Thursday, the private sector lender cut interest rates on savings account by 0.5 percent to 3.5 percent from 4 per cent for deposits below Rs 50 lakh.

For deposits above Rs 50 lakh, the interest rate would remain unchanged at 4 percent.

The new rates would be effective from August 19 and will be applicable to both resident and non-resident customers.

Also read: Time to say goodbye to PPFs, FDs? These funds clocked over 100% returns compared to the combined two instruments

As of June 30, 2017, HDFC Bank had a distribution network with 4,727 branches and 12,220 ATMs in 2,666 cities/towns. The HDFC Bank stock closed 0.86 percent lower at 1765 level on the BSE. The stock is up 47.08 percent or 565  points on an year to date basis.

On July 31, SBI slashed interest rate on savings account deposits by 50 basis points to 3.5 per cent on balance of Rs 1 crore and below, two days ahead of the Reserve Bank's third bi-monthly policy review.

PSU lender Bank of Baroda followed suit and cut the rate by 0.5 percent to 3.5 per cent on deposits of up to Rs 50 lakh. However, for balance above Rs. 50 lakh, the bank retained the rate at 4 per cent.

Private sector lender Axis Bank too reduced interest rate on savings bank accounts by 0.5 per cent to 3.5 per cent for deposits up to Rs. 50 lakh. However, the bank will continue to pay 4 per cent interest on deposits of above Rs 50 lakh.

Karnataka Bank also reduced the interest rate to 3.5 per cent from the existing 4 per cent for daily balance in the range of more than Rs 1 lakh to Rs 50 lakh, and for balances below Rs. 1 lakh, the revised rate is now 3 per cent from the existing 4 per cent.

On Wednesday, private sector lender YES Bank cut the interest rate on savings bank accounts by 1 per cent to 5 per cent for deposits of less than Rs 1 lakh.

However, the bank will continue to pay 6 per cent interest on deposits of over Rs 1 lakh and less than Rs 1 crore. The bank also slashed interest rate on savings accounts to 6.25 per cent from existing 6.5 per cent for deposits over Rs 1 crore.

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