Interest Rates Details: India’s major private banks, HDFC Bank, ICICI Bank, Axis Bank and Federal Bank, have recently cut 25 basis points (0.25%) in interest rates on savings accounts.
Now the interest rate has been reduced to 2.75% on the balance of less than ₹ 50 lakh in these banks. At the same time, State Bank of India (SBI), the country’s largest bank, is paying only 2.7% interest on a balance of ₹ 10 crore from October 2022 to ₹ 10 crore.
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FD rates also fall, CASA growth sharp decline (Interest Rates Details)
These banks have cut interest rates not only on savings accounts, but also on fixed deposits (FD). This decision has been taken at a time when the CASA (current and savings account) ratio in the banking system has come down from 39% to 22% in the last one year.
According to Anand Rathi Securities analyst Kaitav Shah, “This deduction can improve 5 to 8 basis points in net interest margin (NIM) for banks included in our coverage.”
CASA ratio continues to fall, Interest Rates Details on HDFC and SBI
The CASA ratio of banks is continuously decreasing. HDFC Bank’s CASA ratio declined from 38% of the previous year to 34% in December 2024. The total amount in the bank’s savings account was ₹ 6.05 lakh crore and the total deposit was ₹ 24.52 lakh crore.
Similarly, the CASA ratio of SBI declined from 41.18% to 39.2%, in which the savings account remains ₹ 33.51 lakh crore and the total deposit is ₹ 60.80 lakh crore.
Will customers withdraw money from savings accounts? (Interest Rates Details)
Although the fall in savings interest rates can make customers turn to FD, but the research head of McWery Capital Suresh Ganpati believes, “Savings account for transactions and there will be no major change due to a cut of 25 basis points.”
By the end of FY25 deposits in the banking sector were slightly higher than 10%, while the debt hike was recorded at 11%. The first week of April saw 2.4% in deposits, while the loan increased by 0.9%.
Banks will benefit, customers will have to compromise
Experts believe that cuts in savings interest rates will provide low returns to customers, but it will help to maintain the long -term strategy and profit of banks. Also, there is an indication that other private banks can also move forward on this path.