In a significant move that could impact millions of account holders, India’s leading private sector bank, HDFC Bank, has reduced its savings account interest rate by 0.25%. From now on, customers will earn just 2.75% annual interest on their savings accounts, down from the earlier 3%. This revision makes HDFC’s savings account rate the lowest among private banks.
The decision follows the recent policy action by the Reserve Bank of India (RBI), which lowered its repo rate by 0.25%. In response to this, HDFC Bank has aligned its deposit rates to reflect the changing interest rate environment. The cut is part of the bank’s strategy to control operational costs and optimize its profit margins. Analysts suggest that this move could help the bank save around ₹1,500 crore annually.
Interestingly, HDFC Bank has not increased its savings account interest rate in the past 14 years. Back in 2011, the rate stood at 4%, and over time, it has gradually declined to the current level of 2.75%.
The reduction signals a clear trend: customers are now using savings accounts more as a basic transaction tool rather than as an investment vehicle. Many depositors are choosing fixed deposits (FDs) instead, seeking better interest returns amid falling savings account rates.
Here’s a look at how HDFC’s new rate compares with other major banks:
| Bank | New Savings Interest Rate | Previous Rate | FD Rate Adjustment | Effective From |
|---|---|---|---|---|
| HDFC Bank | 2.75% | 3.00% | Cut by 0.35-0.40% | April 1, 2025 |
| SBI | 2.70% (since 2022) | 2.75% (2020) | 3.50% - 7.25% | — |
| Bandhan Bank | 3.00% - 5.00% | 6.00% | 3.00% - 8.05% | — |
| Yes Bank | 3.00% | — | — | — |
Not just savings accounts, fixed deposit rates too have seen a downward revision. Starting April 1, HDFC Bank reduced its FD interest rates by 0.35% to 0.40%, a trend also mirrored by other private lenders such as Yes Bank and Bandhan Bank.
For example, Bandhan Bank lowered its savings rate from 6% to a variable range of 3-5%, and Bajaj Finance has also reduced long-term FD rates by 0.25%.
Banks often offer lower rates on savings accounts compared to fixed deposits, especially when they aim to manage interest payout obligations efficiently. During the 2020 pandemic, even the State Bank of India (SBI) slashed its savings rate to 2.75%, and later reduced it further to 2.7% in 2022.
This move by HDFC reflects a broader strategy among banks to optimize liquidity in response to regulatory rate cuts and evolving market dynamics.
The recent rate cut by HDFC Bank highlights the shifting landscape of savings and investment in India. While savings accounts remain a safe haven for quick transactions, customers aiming for better returns might increasingly prefer fixed deposits or other investment options.
