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YES Bank savings account holders would have to maintain a minimum balance of Rs 3 lakh to earn seven per cent interest rate from April 1.
At present, the bank offers a seven per cent interest rate on savings account with minimum balance of Rs 1 lakh and above and six per cent per annum for a balance below Rs 1 lakh.
In an official communication to its customers, the private sector lender said it has revised the balance slabs for offering seven per cent interest on savings account. The bank, however, maintained that an interest rate of six per cent per annum will be applicable on a balance below Rs 3 lakh.
Pralay Mondal, senior group president, retail and business banking, YES Bank, said, “Most banks have reduced rates. We are still the most competitive in the market and have retained the seven per cent rate for those customers who have a balance of Rs 3 lakh or above. Even for balance below Rs 3 lakh, we offer the most competitive rate of six per cent to our customers.”
In 2014, private sector lender IndusInd Bank was the first bank to reduce the interest rate on savings bank accounts, after it was deregulated by the Reserve Bank of India (RBI) in 2011. The lender was also among the few banks which started offering more on savings account when rates were freed.
IndusInd had cut the interest rate on savings account to 4.5 per cent per annum against 5.5 per cent per annum earlier for daily balance less than Rs 1 lakh. The reduction in interest rate came into effect from September 1 last year. The bank, however, maintained the rate of six per cent per annum for daily balance equal to or greater than Rs 1 lakh. All the public sector banks and all large private banks offer four per cent on savings bank deposits.
The bank had raised the rate in October 2011 following deregulation of the savings bank interest rate. Some other banks like YES Bank and Kotak Mahindra Bank had also hiked the rate following the deregulation.
Later, Kotak Mahindra Bank had also said that with effect from November 1, 2014, the interest rate on daily balances up to Rs 1 lakh in savings accounts will be revised to 5 per cent per annum. It had however said that daily balances over Rs 1 lakh will continue to earn six per cent interest a year. Earlier the bank offered 5.5 per cent on deposits up to Rs 1 lakh.
Similarly, from September 1, 2014, Lakshmi Vilas Bank had revised its interest rates to offer five per cent per annum to those with savings bank account balance of Rs 1 lakh and above. Those with balance of below Rs 1 lakh would earn interest of five per cent.
On March 4, 2015, RBI cut the repo rate by 25 basis points to 7.5 per cent. With interest rate going down, it was expected that higher interest rate offered by banks on savings account would also go down.
