ICICI Bank Slashes Savings Account Rate by 25 Basis Points

ICICI Bank Ltd. has revised the interest rate on its savings account deposits, reducing it by 25 basis points. Effective from April 16, the revised rates apply to balances below ₹50 lakh, which will now earn an annual interest of 2.75%. 

Meanwhile, deposits exceeding ₹50 lakh will attract an interest rate of 3.25% per annum, as per the official communication on the bank’s website. 

Context: RBI’s Recent Policy Shift Sparks Sector-Wide Rate Cuts

This adjustment by ICICI Bank is part of a broader trend across the banking sector, which comes in response to the Reserve Bank of India’s recent decision.

Last week, the RBI’s Monetary Policy Committee reduced the key policy interest rate by 25 basis points, bringing it down to 6%. Such changes in the repo rate usually ripple through the banking system, influencing lending and deposit rates alike.

Sector Movement: Other Major Banks Follow Suit

Prior to ICICI Bank’s move, several other major private and public sector lenders had already revised their savings and deposit rates. On April 12, HDFC Bank Ltd. reduced its savings account rate by 25 basis points to 2.75% and adjusted fixed deposit rates downward by up to 40 basis points for select long-term tenures.

Likewise, institutions such as State Bank of India, Kotak Mahindra Bank Ltd., Bank of India, and Yes Bank have implemented similar reductions in their deposit interest rates, reflecting a sector-wide recalibration in response to the RBI’s policy action.

Impact: Cost of Funds and Bank Profitability

By lowering savings account interest rates, banks can reduce their overall cost of funds. This reduction allows for a potential increase in net interest margins (NIMs), which is the difference between interest earned on loans and interest paid on deposits. A higher NIM contributes positively to a bank’s profitability, especially when loan growth remains steady or increases.

While beneficial for banks’ balance sheets, these interest rate revisions may have implications for depositors who rely on savings account returns for liquidity and short-term income.

Conclusion

The recent rate cut by ICICI Bank aligns with the broader moves within the banking industry, all triggered by the RBI’s monetary policy stance. As financial institutions continue to respond to macroeconomic signals, deposit rates may remain fluid in the near term, shaped by central bank actions and evolving liquidity conditions.

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