The Reserve Bank of India (RBI) cut the repo rate by 25 basis points (bps)—from 6.50% to 6.25%—during its Monetary Policy Committee (MPC) meeting on February 7, 2025. This marks the first reduction in the repo rate by the RBI since 2020. The repo rate is the interest rate at which the RBI lends money to commercial banks for their short-term liquidity requirements. A reduction in this rate lowers the cost of borrowing for banks, which can lead to decreased interest rates on loans and deposits for consumers.
Will the rate cut impact savings account interest rates?
When the RBI lowers the repo rate, it becomes cheaper for banks to borrow funds. As a result, banks may lower the interest rates on savings accounts in order to maintain their profit margins. On the other hand, when the Reserve Bank raises the repo rate, banks may raise interest rates on savings accounts to attract more deposits, as per AU Small Finance Bank website.
Last window for FD investors to book FDs at higher rate has officially started as RBI cuts repo rate after a 5 years gapFollowing the RBI’s reduction of the repo rate, there are expectations that banks might lower interest rates on savings accounts. In fact, RBL Bank has already reduced the interest rate it gives on small balances by 25 basis points (bps).
The interest rate on savings accounts is calculated based on the account holder’s daily closing balance. The interest is credited to the account holder’s account on a monthly or quarterly basis, depending on the bank’s discretion.
Here is a quick comparison of interest rates offered on savings accounts by some of the leading banks, including State Bank of India (SBI), HDFC Bank, ICICI Bank, Punjab National Bank (PNB), and Bank of Baroda. Let’s see where you can earn the highest interest on your savings.
State Bank of India savings account interest rate
For balances up to Rs 10 crore: 2.70%
For balances above Rs 10 crore: 3.00%
Effective from: October 15, 2022
HDFC Bank savings account interest rate
For balances less than Rs 50 lakh: 3.00%
For balances greater than Rs 50 lakh: 3.50%
Effective from: April 6, 2022
ICICI Bank savings account interest rate
For balances less than Rs 50 lakh: 3.00%
For balances greater than Rs 50 lakh: 3.50%
Kotak Mahindra Bank savings account interest rate
For balances up to Rs 5 lakh: 3.00%
For balances between Rs 5 lakh and Rs 50 lakh: 3.50%
For balances above Rs 50 lakh: 4.00%
Effective from: October 17, 2024
PNB savings account interest rate
For balances below Rs 10 lakh: 2.70%
For balances between Rs 10 lakh and Rs 100 crore: 2.75%
For balances of Rs 100 crore & above: 3.00%
Effective from: January 1, 2023
Bank of Baroda savings account interest rate
Bank of Baroda offers savings account interest rates ranging from 2.75% to 4.10%, depending on the balance.
For balances between Rs 1 lakh and Rs 50 crore: 2.75%
For balances between Rs 50 crore and Rs 200 crore: 3.00%
For balances between Rs 200 crore and Rs 500 crore: 3.05%
For balances between Rs 500 crore and Rs 1,000 crore: 4.10%
Effective from: February 27, 2024.
