Context:
ICICI Bank has reduced its savings account deposit interest rates by 25 basis points (0.25%), following a similar move by HDFC Bank. This decision aligns with the broader trend of lowering deposit rates amid the Reserve Bank of India’s recent back-to-back rate cuts.
Revised Interest Rates – Effective Now:
- Up to ₹50 lakh balance:
- New Rate: 2.75% per annum
- Previous Rate: 3.00% per annum
- Above ₹50 lakh balance:
- New Rate: 3.25% per annum
- Previous Rate: 3.50% per annum
These rates are now on par with HDFC Bank, India’s largest private lender, which also announced similar rate reductions recently.
Why This Matters
- Follows RBI Easing: The RBI’s recent policy rate cuts are prompting banks to adjust their deposit and lending rates.
- Liquidity Management: Banks are flush with liquidity and facing muted credit demand, reducing the need to offer higher deposit rates.
- Impact on Savers: Depositors, especially those relying on savings interest for income, will now see lower earnings on their idle bank balances.
The rate cut reflects the ongoing shift in the interest rate cycle. Depositors may want to explore fixed deposits, short-term debt funds, or hybrid instruments for better yields while keeping risk appetite and liquidity needs in mind.
