15 Apr , 2025 By : Debdeep Gupta
India's largest private lender HDFC Bank's shares jumped three percent during the April 15 session, after the bank trimmed its interest rate on saving accounts with deposits under Rs 50 lakh.
In the wake of the Reserve Bank of India cutting its policy rate at its latest monetary policy meeting, HDFC Bank has decided to reduce its savings account interest rate from 3 percent to 2.75 percent with effect from April 12 for deposits of up to Rs 50 lakh.
At 9.25 am, shares of the bank were quoting Rs 1,870.3 apiece on the NSE, higher by 3.5 percent, to emerge as one of the top gainers on the Nifty 50 index.
Deposits beyond this limit will earn 3.25 percent per annum. The bank had last slashed interest rates for this slab during COVID-19 outbreak, in June 2020.
HDFC Bank has not hiked its savings rate over the past 14 years, as customers prefer fixed deposits to park excess capital, in place of savings accounts, which are used for conducting transactions.
According to international brokerage Goldman Sachs, the move highlights confidence in deposit accretion, and alignment with the central bank's stance. Further, the move is likely to ease margin pressures for the bank amid a potential rate-cut cycle.
The Reserve Bank of India’s Monetary Policy Committee (MPC) cut the repo rate by 25 basis points (bps), from 6.25 percent to 6 percent on April 9. In his policy statement, RBI governor Sanjay Malhotra had pointed out that the banking system's liquidity deficit had turned into surplus on March 29 due to a slew of measures that injected about Rs 6.9 lakh crore into the system.
“Coupled with government spending picking up pace during the latter half of March, system liquidity further improved and it stood at a surplus of Rs 1.5 lakh crore as on 7th April, 2025,” he said.
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