Axis Bank Cuts Interest For Savings Account By 25 Basis Points To 2.75%
Balances below Rs 50 lakh will attract a savings account rate of 2.75% annually and those from Rs 50 lakh to below Rs 2,000 crore will attract a rate of interest of 3.25% annually.
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Axis Bank has joined other lenders in lowering deposit rates. India's third-largest private sector bank has cut the savings account rate by 25 bps to 2.75%, with effect from Tuesday, according to the bank's website.
These fresh rates will apply to domestic, non-resident external accounts and non-resident ordinary accounts.
According to the bank's website, balances below Rs 50 lakh will attract a savings account rate of 2.75% annually and those from Rs 50 lakh to below Rs 2,000 crore will attract a rate of interest of 3.25% annually.
Furthermore, balances of Rs 2,000 crore and above will have their interest rate linked to the overnight Mumbai Interbank Offered Rate (MIBOR) + 0.70%.
This move follows the Reserve Bank of India's Monetary Policy Committee last week cutting the interest rate by 25 basis points to 6.00%, leading to interest rate cuts across the sector.
On April 12, HDFC Bank cut the interest rate for savings accounts by 25 bps to 2.75% and its fixed deposit rates by up to 40 bps for longer tenures.
Other large banks, such as State Bank of India, Kotak Mahindra Bank, Bank of India, and YES Bank, have also lowered deposit rates.
Reducing a savings account rate cut will help banks in lowering their cost of funds, leading to an expansion in their net interest margins.
Analysts expect other banks to follow suit in reducing the interest on savings accounts.
This brings relief for private sector banks in terms of margin contraction, as most of them are linked to external benchmark lending rates.
Further, several banks having recently announced cuts in term deposit rates across various maturity buckets should also help margins in Apr-Jun.
This has come as the banking system liquidity turned into surplus recently after the RBI took several measures to inject durable liquidity.
Additionally, the RBI moving away from a neutral to an accommodative stance, more open market operations, purchases of gilts, and an easing dollar will lead to favourable liquidity conditions going forward.
