After the Reserve Bank of India (RBI) reduced the repo rate, Kotak Mahindra Bank has now announced a reduction in savings account interest rates.
Kotak Mahindra Bank, a leading private sector bank, has announced a 50 basis points (bps) reduction in interest rates on savings accounts with a daily balance of up to ₹5 lakh.
The interest rate has been reduced from 3.50% to 3%. As per Kotak Mahindra Bank’s official website, the new rates have been effective since February 17, 2025.
In the Monetary Policy Committee (MPC) meeting of the Reserve Bank of India (RBI) held from February 5 to February 7, 2025, members unanimously decided to cut the repo rate by 25 basis points (bps), bringing it down from 6.50% to 6.25%.
This marks the first repo rate reduction in nearly five years. Following the Covid-19 pandemic, RBI had steadily raised the repo rate by approximately 250 basis points (bps).
Starting April 1, 2016, interest on savings accounts will be paid quarterly.
This means the interest, which is calculated daily, will be credited every year on June 30, September 30, December 31, and March 31.
How Much Interest Will You Get Now?
As per the revised interest rates effective from February 17, 2025, savings accounts with a daily balance of up to ₹50 lakh will earn 3% interest per annum, while balances above ₹50 lakh will receive 3.50% interest annually.
This means the interest rate for amounts exceeding ₹50 lakh has been reduced from 4% to 3.50%. These rates apply to both resident and non-resident accounts.
Kotak Mahindra Bank announced on its official website that, effective February 17, 2025, savings accounts with a daily balance of up to ₹50 lakh will earn 3% interest per annum, while balances above ₹50 lakh will receive 3.50% interest.
These rates apply to both resident and non-resident (NRI/NRO) accounts. This decision is a significant setback for common account holders.
