Which banks are paying highest savings account interest rates post RBI rate cut?

The high interest rate regime seems to be over in the country with the RBI slashing its repo rate, at which it lends to commercial banks, by 50 basis points (bps) this year. The key benchmark lending rate of the central bank now stands at 6% after last 25 bps cut on April 9, 2025.

Now, the repo rate cut impact can be seen on various bank products, including loans, fixed deposits and savings account deposits. Over the past one week, several banks, including public sector lenders, have cut their lending rates and adjusted their fixed deposit rates. Banks have also trimmed rates for savings account holders.

Lowest savings account interest in public sector banks

Most of the public sector banks are currently giving interest rates ranging from 2.7% to a maximum of 2.9% on savings accounts. Big banks like State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda are giving only 2.7% interest.

Bank of India, Indian Bank, Bank of Maharashtra, Indian Overseas Bank and Union Bank of India are offering 2.75% interest rate to their savings account customers. Central Bank of India’s rate is slightly higher at 2.8%. At the same time, Canara Bank is at the forefront with a rate of 2.9%.

Also read: Home Loan Hacks: Your monthly EMI can drop if you follow THESE 4 tips

Private sector banks offering slightly better rates to savings account customers

Private sector banks are giving slightly better returns. ICICI Bank, Axis Bank, Kotak Mahindra, Yes Bank, IDFC Bank, Federal Bank, Bandhan Bank and AU Small Finance Bank are all paying 3% interest. At the same time, RBL Bank is offering the highest interest of 3.25%.

HDFC Bank, IDBI Bank and Karnataka Bank are all offering 2.75% interest rates to their savings account customers. Among the private sector lenders, RBL Bank is giving the highest rate of 3.25% to their savings account customers.

Savings Account Interest Rates – PSU banks Vs Private banks

Can interest rates come down further in the coming months?

RBI’s focus is now on accelerating economic growth. If the retail inflation rate i.e. Consumer Price Index (CPI) remains stable in the coming months and RBI feels that inflation is under control, then it can cut rates further in the future. This will have a direct impact on the interest received on fixed deposits and savings accounts. That is, banks may start paying less interest in future.

Adhil Shetty, CEO of BankBazaar, says, “With the RBI cutting the repo rate by 50 basis points and banks responding by slashing savings and FD rates, we are clearly entering a softer interest rate regime. If inflation remains within the RBI’s comfort zone, further rate cuts are likely in the coming quarters. This signals a shift towards cheaper borrowing, encouraging consumption and investment. However, for depositors, this means lower returns on traditional deposits. Going forward, the focus will likely be on growth support, and interest rates may stay low, depending on global cues and domestic economic activities.”

Also read: THESE 4 PSU banks cut lending rates following RBI’s repo rate announcement

Summing up:

If you are thinking of earning interest by keeping your money only in a savings account, then in the current environment you will get very low returns. It would be better if you also consider investing some amount in FDs, mutual funds, or government savings schemes as per your needs.