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Banks (Finance)

RBI's Repo Rate Cut Hits Savings Account Holders Hard

Strategic Insights

— 2 min read

The Reserve Bank of India's (RBI) repo rate cut of 100 basis points over the past five months has had a ripple effect on the interest rates of savings accounts in major banks. In a bid to pass on the benefits of cheaper loans to borrowers, top banks like SBI, HDFC, and ICICI have slashed their interest rates on savings accounts. This move has left depositors with reduced returns on their idle savings, affecting the earnings of crores of small depositors. The banks have implemented a uniform interest rate on all savings accounts, causing a direct loss to high-value account holders.

Key Takeaways:

  • SBI has implemented a uniform interest rate of 2.5% per annum on all savings accounts from June 15, 2025, down from 2.7% on balance less than Rs 10 crore and 3% on Rs 10 crore or more.
  • HDFC Bank has started paying a uniform 2.75% per annum interest on all savings accounts from June 10, 2025, down from 2.75% interest on less than Rs 50 lakh and 3.25% interest on Rs 50 lakh or more.
  • ICICI Bank has also cut interest rates from June 12, 2025, offering 2.75% interest per annum on all savings accounts, down from 3.25% interest on amounts above Rs 50 lakh.
  • Other banks like Bank of Baroda, Federal Bank, IndusInd Bank, RBL Bank, and Canara Bank have also reduced their savings account interest rates, with rates varying depending on the deposit amount.
  • The new rates have caused a direct loss to high-value account holders, with some banks offering reduced interest rates across the board.
  • The reduced interest rates are a direct result of the RBI's repo rate cut, which aims to make loans cheaper for borrowers but has hit savings account holders hard.

Statistics:

  • RBI's repo rate cut of 100 basis points over the past five months.
  • SBI savings account interest rate reduced from 2.7% on balance less than Rs 10 crore and 3% on Rs 10 crore or more to a uniform 2.5% per annum from June 15, 2025.
  • HDFC Bank savings account interest rate reduced from 2.75% on less than Rs 50 lakh and 3.25% on Rs 50 lakh or more to a uniform 2.75% per annum from June 10, 2025.
  • ICICI Bank savings account interest rate reduced from 3.25% on amounts above Rs 50 lakh to 2.75% per annum from June 12, 2025.
  • Bank of Baroda savings account interest rates ranging from 2.7% to 4.25% from June 12, 2025.
  • Federal Bank savings account interest rates ranging from 2.5% to 6.25% from June 17, 2025.
  • IndusInd Bank savings account interest rates ranging from 3% to 5% from June 16, 2025.
  • RBL Bank savings account interest rates ranging from 3% to 6.75% from June 16, 2025.
  • Canara Bank savings account interest rates ranging from 2.70% to 4% from May 19, 2025.

Sources:

  • "RBI's repo rate cut hits savings account holders hard" by IE Online Media Services Pvt. Ltd.
  • Contify.com

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