ICICI Bank Ltd. has cut the interest rate on its savings account by 25 basis points to 2.75%, with effect from Wednesday, according to the bank's website.
Balances that are below Rs 50 lakh will attract a savings account rate of 2.75% annually and those above Rs 50 lakh will attract a rate of interest of 3.25% per year.
On Tuesday, Axis Bank had cut the savings account rate by 25 bps to 2.75%, with immediate effect.
This move follows after the Reserve Bank of India's Monetary Policy Committee cut the interest rate by 25 bps to 6.00% last week, leading to interest rate cuts across the sector.
On April 12, HDFC Bank Ltd. had 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 Ltd., Bank of India, and Yes Bank, have also lowered deposit rates.
Reducing a savings account rate 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.
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