Axis Bank Cuts Savings Deposit Rate

Wed, 16 April 2025

11:34

Axis Bank, the country's third largest private sector lender, has trimmed its savings account interest by 25 basis points (bps), effective April 15.

According to the bank's website, the bank is offering an interest rate of 2.75 per cent per annum on deposits of up to 50 lakh, while deposits above 50 lakh and up to 2,000 crore will earn an interest rate of 3.25 per cent per annum.

For deposits exceeding 2,000 crore, the interest rate is linked to the overnight Mumbai Interbank Offered Rate (MIBOR) plus 70 basis points. Axis Bank's shares closed 4.18 per cent higher at 1,114.05 on the BSE on Tuesday, as the reduction in savings deposit rates is likely to be margin accretive for the bank in the current quarter (Q1FY26).

This move by Axis Bank comes after HDFC Bank, country's largest private sector lender, earlier this week, revised interest on savings account by 25 bps to 2.75 per cent from 3 per cent for deposits up to Rs 50 lakh. For balances over Rs 50 lakh, the bank is offering an interest of 3.25 per cent, effective April 12. HDFC Bank's shares closed 3.23 per cent higher at 1,864. 90 on the BSE, following its decision to trim interest rate on savings account deposits as analysts termed this a 'brave move' by the bank.

According to a Macquarie Capital report, the 25 bps reduction in savings deposit rate will add 5 bps to the banks' margin in April-June quarter (Q1FY26).

Share of savings deposits has come down from a peak level of 33 per cent seen 3 years ago to 24 per cent currently (merger impact has been 300bps) for HDFC Bank.

Meanwhile, ICICI Bank, the country's second largest private sector lender, is yet to cut interest rate on its savings deposit and is still offering 3 per cent interest rate for deposits up to 50 lakh, and 3.50 per cent on deposit above 50 lakh. State Bank of India, the country's largest lender, already offers a lower savings deposit rate of 2.7 per cent per annum for balances of up to 10 crore. For deposits above 10 crore, the bank offers 3 per cent per annum, effective October 2022. Analysts are expecting more banks to follow suit in cutting interest rates on savings account deposits. This follows the RBI reducing policy rate by 50 bps in two successive monetary policy meetings.

Subrata Panda, Business Standard

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