HDFC Bank Slashes Savings Account Interest Rates After RBI Repo Rate Cut

Impact on Over 6 Lakh Crore in Deposits Could Save Bank ₹1,500 Crore Annually

In a major move impacting millions of account holders, HDFC Bank has reduced its savings account interest rates following the Reserve Bank of India’s (RBI) recent decision to cut the repo rate. The bank has lowered its interest by 25 basis points, now offering 2.75% interest on balances up to ₹50 lakh and 3.25% on balances above ₹50 lakh. Earlier, the respective rates stood at 3% and 3.5%.

This strategic rate revision is aimed at reducing the cost of funds and preserving profit margins. Notably, this is the first time in 14 years that HDFC Bank has revised savings account interest rates. The bank currently holds over ₹6 lakh crore in savings account deposits, and the interest rate cut could translate to approximately ₹1,500 crore in annual savings.

Shift in Banking Trends: From Savings to Transactions

The banking industry is witnessing a significant behavioral shift among consumers. Savings accounts are increasingly being used for transaction purposes rather than for long-term savings. Customers are now leaning towards fixed deposits (FDs) to grow their wealth due to the higher returns they offer. This has led to a decline in low-cost deposits, commonly known as CASA (Current Account Savings Account), prompting banks to reevaluate their deposit strategies.

Other Banks Follow Suit with Interest Rate Cuts

HDFC Bank isn’t alone in adjusting interest offerings. Several leading banks and financial institutions have also revised their interest rates:

• Yes Bank has decreased its FD rates by 25 basis points.

• Bandhan Bank has slashed savings account interest rates from 6% to a range of 3% to 5%.

• Bajaj Finance has reduced interest on long-term FDs.

• Bank of India has discontinued its special 400-day FD scheme which offered 7.3% interest.

• HDFC Bank has also reduced FD interest rates by 35-40 basis points on select tenures starting April 1.

This broad trend reflects the banking sector’s response to the evolving interest rate environment and changing customer behavior.