Four lenders cut rates on savings deposits this week as banks are flush with funds even seven months after demonetisation forced people to turn in most of their cash. The central bank’s repo rate cut on Wednesday further reduced the cost of funds.
Bank of Baroda cut rate on savings account deposits worth up to Rs 50 lakh by 50 basis points on Friday to 3.5 percent a year (a basis point is one hundredth of a percentage point). For deposits worth more than Rs 50 lakh, the rate continues to remain at 4 percent, the bank said in a notification on the stock exchanges.
It joins State Bank of India Ltd., Karnataka Bank and Kotak Mahindra Bank to lower rates on savings deposits. SBI, the country’s largest lender surprised the market on Monday by reducing interest on savings account deposits worth up to Rs 1 crore by 50 bps to 3.5 percent.