HDFC Bank Adjusts Savings Account Rates

In a significant move, HDFC Bank, India's largest private sector lender, has reduced the interest rates on savings accounts by 25 basis points to 2.75%. This adjustment comes in the wake of the RBI's 25 basis point repo rate cut, aiming to lower the bank's cost of funds and safeguard margins.

Impact on High-Value Deposits

For balances exceeding Rs 50 lakh, the rate has been adjusted to 3.25%, down from 3.5%. This change, albeit modest, hints at a broader realignment in deposit strategies across the banking sector.

Shift in Depositor Behavior

The reduction reflects a changing trend where customers increasingly view savings accounts as transaction conduits rather than savings vehicles, with surplus funds being directed towards higher-yielding fixed deposits.

Broader Banking Sector Trends

The last sector-wide adjustment in savings rates occurred during the pandemic, with State Bank of India leading the way. The current shift is part of a larger transition from a liquidity deficit to a surplus, with RBI aiming to maintain liquidity at 1% of net demand and time liabilities.

Additional Rate Adjustments

Other financial institutions, including Yes Bank and Bajaj Finance, have also revised their deposit rates, signaling a widespread recalibration in response to evolving market conditions.