HDFC Bank Cuts Savings Account Interest Rate to 2.75% – What It Means for Customers

April 15, 2025 New Delhi In a strategic move that aligns with current monetary trends, HDFC Bank, India’s second-largest private bank, has announced a 25 basis point cut in savings account interest rates, bringing it down to 2.75%. The change, which took effect from April 12, now places HDFC in line with major public sector banks like SBI and PNB, both of which offer rates close to 2.70%.

Why the Cut? A Response to RBI’s Rate Move

This rate adjustment follows the Reserve Bank of India’s second repo rate cut this year, which has influenced lending and deposit rate decisions across the banking sector. According to HDFC’s official website, this is the first time since June 2020 that the bank has reduced its savings interest rate, the last time being during the post-COVID liquidity surplus.

• New Rate: 2.75% (from 3.00%)

• Previous Cut: June 2020

• In Comparison:

  • ICICI Bank & Axis Bank: Still at 3.00%

  • Bank of Baroda: Also at 2.75%

What It Means for Customers

While the lower savings rate may concern some depositors, financial experts point out that savings account customers are generally less rate-sensitive, and this change is unlikely to impact deposit inflows significantly.

• HDFC’s CASA ratio (Current and Savings Accounts) stands at 34% of total deposits

• Of that, 69% are savings account deposits

• Estimated value: ₹6 lakh crore in savings deposits

The move will help HDFC reduce its funding costs immediately, a key strategy at a time when loan-to-deposit ratios are high and banks are striving to maintain healthy net interest margins.

Impact on Fixed Deposits and Lending

According to ICRA’s Anil Gupta, term deposit rate adjustments tend to lag due to re-pricing cycles, while savings rate cuts show instant effects. However, with stiff competition in the retail deposit space and tight liquidity coverage ratios, reductions in FD rates are expected, but more gradually.

Why This Matters for You

• If you hold a savings account with HDFC, your interest earnings will now be slightly lower

• If you’re comparing banks for new accounts, ICICI and Axis may still offer slightly higher returns on savings

• However, HDFC’s widespread services, digital banking strength, and merger with HDFC Ltd. make it a stable choice for holistic banking needs