Mid-sized private lender Yes Bank on Wednesday became the fifth bank to reduce interest rates on savings accounts. With effect from September 1, savings accounts with balances under Rs 1 lakh at the bank will now earn 5%, against 6% so far. Accounts with balances of Rs 1 crore and above will earn 6.25%, compared with 6.5% earlier. In the last two weeks, State Bank of India (SBI), Bank of Baroda (BoB) and Axis Bank have all reduced interest rates on savings accounts by 50 basis points (bps) to 3.5%. While the cut at SBI applies to accounts with balances up to Rs 1 crore, the reduction at BoB and Axis Bank is for accounts with balances up to Rs 50 lakh. Kotak Mahindra Bank reduced the rate on deposits of between Rs 1 crore and Rs 5 crore by 50 bps to 5.5% on August 4.
Yes Bank had earlier mentioned lowering the SA rate in line with the system as one of the tools available to them to reach their stated goal of a 4% net interest margin by FY20.