The bank has lowered the rate by 25 basis points, with the revised rate already into effect from April 12, as per information on the bankβs website. The move comes shortly after the Reserve Bank of India (RBI) announced its second consecutive benchmark repo rate cut for the year.
With this change, HDFC Bankβs savings rate now falls below that of major peers ICICI Bank and Axis Bank, both of which are currently offering 3% interest on savings balances below βΉ50 lakh.
The rate cut is likely to help the bank reduce its cost of funds, potentially supporting margins in a softening interest rate environment. However, the move may also draw scrutiny from depositors, especially in a competitive banking landscape.
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HDFC Bank has been actively working to increase its term deposit base following its merger with home loan giant HDFC in 2023. The recent reduction in savings account interest rates could potentially encourage more customers to shift their funds into higher-yielding options like term and recurring deposits.
Post the merger in July 2023, HDFC Bank saw its credit-deposit (CD) ratio surge past 100%, driven by the large volume of mortgage loans it absorbed, which exceeded its existing deposit levels. Although the ratio has since improved to 98%, it remains elevated compared to the pre-merger range of 85% to 87%.
On Friday, the shares of HDFC Bank closed 2.3% higher at Rs 1,805.20 on the NSE.
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