India's best capitalised lender Kotak Mahindra Bank Ltd. will not follow State Bank of India in cutting the interest rate on smaller savings accounts even as other banks consider it after inflation hit a record low at a time when lenders are flushed with liquidity.
Kotak Mahindra held rates at 6 percent for savings accounts with a balance between Rs 1 lakh and Rs 1 crore when "interest rates are on a downward trajectory", according to a media statement. It also held rates for accounts below Rs 1 lakh at 5 percent, and accounts over Rs 5.5 crore at 5.5 percent. The only revision the bank has done is a 50 basis point cut for savings account deposits between Rs 1 crore and Rs 5 crore. The new rates will come into effect from Friday.
"Effectively, 99.9 percent of our savings account customers continue to enjoy the same savings rate as before", Shanti Ekambaram, president of consumer banking at Kotak Mahindra said in the media statement.
"Borrowers matter so do savers", said chief Uday Kotak in a tweet on Thursday.
India's largest bank SBI had slashed savings rate on accounts below Rs 1 crore to 3.5 percent from 4 percent earlier, saying that the fall in inflation and high real interest rates warranted a revision. The was the first time that India’s largest bank cut savings rates since it was deregulated by the Reserve Bank of India almost six years ago.
Bankers that BloombergQuint spoke with said they would consider SBI’s decision at the meetings of their respective asset liability committees (ALCO). Rajkiran Rai, Chief of Union Bank of India, had said that a savings rate cut would be a “huge cost benefit for the banks”.
Kotak Mahindra Bank's capital aduequacy ratio stood at 19.2 percent at the end of June, which was the best among all large Indian banks.
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