IndusInd Bank cuts interest rate on savings accounts to 4.5%

IndusInd Bank reduced its interest rates on savings accounts to 4.5 per cent from earlier 5.5 per cent per annum on daily balance of up to Rs 1 lakh.

For balance of above Rs 1 lakh, the interest rates continue to be at 6 per cent.

“The revised interest rates are applicable with effect from September 1, 2014 till further notice. The bank has the right to change the rate at its discretion,” IndusInd Bank said on its website.

The interest will be calculated on daily basis, at the end of day ledger balance in the account and paid at every calendar quarter on 30th June, 30th September, 31st December and 31st March.

After the interest rate on savings was deregulated by the Reserve Bank of India in 2011, banks including IndusInd Bank, Kotak Mahindra Bank and YES Bank were among the first few banks to increase rate above the earlier mandate of 4 per cent.

This aided banks to add more savings bank accounts and thereby expanding their retail client base. However, a higher interest rate also increases cost to banks.

YES Bank continues to offer an interest rate of 7 per cent per annum on savings bank account balance of Rs 1 lakh and above while 6 per cent per annum for balance below Rs 1 lakh. While, Kotak Mahindra Bank offers 6 per cent interest per annum on savings bank account balance over Rs 1 lakh and 5.5 per cent per annum on balance up to Rs 1 lakh.

Following them, old private sector lender, Lakshmi Vilas Bank, recently increased its savings bank interest rate to 5 per cent for accounts with a balance of Rs 1 lakh and above.

All public sector banks and big private banks offer interest rate of 4 per cent on savings bank accounts.

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