Private sector IDFC First Bank will cut the interest rate on savings accounts from 6 percent to 4-5 percent for accounts with a balance of more than Rs 1 lakh and up to Rs 2 crore from May 1.

The bank will now offer an interest rate of 4.5 percent for accounts with a balance of Rs 1-10 lakh, 5 percent for balances up to Rs 2 crore, and 4 percent for balances of Rs 2-10 crore, a statement on the bank’s website mentioned.

In February, the bank had cut the interest rate on savings accounts from 7 percent to 6 percent. Also, this is the only bank that used to offer 6 percent interest rates to small depositors, those maintaining a balance of below Rs 1 lakh.

Also read:

HDFC Bank's CEO Sashi Jagdishan announces top management rejig

Some mid-sized private banks and small finance banks offer better rates on the savings account. But large private sector banks offer a 3-3.5 percent interest rate. Public sector banks offer similar rates and some banks like the State Bank of India offer even lower rates of 2.7 percent.

IDFC First Bank after the merger with Capital First in 2018 has morphed itself into a retail lender from a legacy infrastructure financier.

The banks have given guidance of the Current Account and Savings Account (CASA) ratio of 30 percent by the fiscal year 2024 and 50 percent thereafter. The bank has seen its current and savings account (CASA) ratio increase to 48.3 percent as of 31 December 2020 from 11.4 percent as of March 31, 2019.

Also read: SBI slashes home interest rates to 6.7 percent

According to estimates given for the fiscal year 2021, the bank’s loan book has grown at 10.09 percent, higher than the industry's growth. Deposits have grown at 43.15 percent year-on-year for the lender and the CASA ratio rose to 51.95 percent as of March from 31.87 percent a year ago.

(Edited by : Jomy)

First Published:May 1, 2021 3:07 PM IST