Close on the heels of some public and private sector banks slashing their interest rates on savings bank accounts, Allahabad Bank is going to introduce 2-tier savings bank interest rate with effect from October 1 this year. For balance less than Rs 40 lakh, interest rate has been set at 3.5% per annum, while for balances of Rs 40 lakh and above, interest rate remains unchanged at 4% per annum, CNBC-TV18 reported today.
It may be recalled that a host of banks, including SBI and Bank of Baroda, had recently slashed their interest rates on savings bank accounts. For instance, State Bank of India, India’s largest commercial bank, had on July 31 slashed interest rate on savings account deposits by 50 basis points to 3.5% on balance of Rs 1 crore and below. However, it continues to offer 4% interest on savings account balance of Rs 1 crore and above. “The decline in the rate of inflation and high real interest rates are the primary considerations for warranting a revision in the rate of interest of savings bank deposits,” it had said.
That was followed by Bank of Baroda slashing its interest rate on savings bank accounts by 50 bps to 3.5% on deposits of up to Rs 50 lakh. “We wish to inform you that it has been decided to introduce a 2-tier savings bank interest rate (from) August 5…,” the bank had said in a regulatory filing. It had reduced the interest rate on savings bank balance of up to Rs 50 lakh to 3.5 per cent from the earlier 4 per cent. However, for balance above of Rs 50 lakh, the bank had retained the rate at 4 per cent.