Kotak Mahindra Bank slashes savings account interest rates; here’s how to make your money work harder
Kotak Mahindra Bank has announced a reduction in its savings account interest rates by 25 basis points, effective from April 25, 2025. This adjustment means that daily balances in savings accounts up to Rs 50 lakh will now earn an interest rate of 2.75% per annum, while balances exceeding Rs 50 lakh will receive 3.25% per annum.
Previously, these were set at 3.00% and 3.50% respectively. The revised rates apply to both resident and non-resident accounts, including NRE and NRO accounts. According to Kotak Mahindra Bank, “Effective April 25, 2025, daily balances in Savings Account up to Rs. 50 Lakh will earn 2.75% interest p.a. and above Rs. 50 Lakh will earn 3.25% p.a. respectively. These interest rates are applicable for both Resident and Non Resident Accounts (NRE/ NRO).”
In addition to changes in savings account rates, Kotak Mahindra Bank has also decreased its fixed deposit (FD) interest rates by up to 30 basis points on select tenures. This marks the second reduction in fixed deposit rates by Kotak Mahindra Bank this month, with the new rates effective from April 23, 2025. The revised fixed deposit rates cover various maturity periods, impacting customers’ returns on their deposits.
The move by Kotak Mahindra Bank comes amid a broader trend of banks reassessing their interest rate structures in response to changing market conditions. Following the Reserve Bank of India’s decision to cut the repo rate by 25 basis points on April 9, 2025, several private sector banks have reduced interest rates on their savings accounts in response to the changed monetary landscape. ICICI Bank, HDFC Bank, Axis Bank, YES Bank, and DCB Bank have all rolled out revised rates, aligning with the RBI’s dovish stance.
ICICI Bank, India’s second-largest lender by market capitalisation, has slashed its savings account interest rates by 25 bps. Effective immediately, account holders with balances below Rs 50 lakh will now earn 2.75% per annum, down from 3%. For balances of Rs 50 lakh and above, the rate is now 3.25%, compared to the earlier 3.5%. These rates are calculated on the daily closing balance.
HDFC Bank has made similar revisions. As per its website, from April 12, 2025, savings account balances below Rs 50 lakh now earn 2.75% per annum (down from 3%), while balances of Rs 50 lakh and above attract 3.25% interest, down from 3.5%.
Axis Bank has also adjusted its savings interest rates, effective April 15. For balances below Rs 50 lakh, the rate is now 2.75% per annum. Balances between Rs 50 lakh and Rs 2,000 crore earn 3.25%, while amounts above Rs 2,000 crore will earn interest linked to the overnight MIBOR plus 0.70%.
YES Bank’s revised rates come into effect from April 21. The bank now offers between 3% and 5% per annum on domestic and NRI savings accounts, depending on the balance slabs. The interest is calculated on incremental balances at applicable slab rates.
How to keep your money working smarter
With top private banks slashing savings account interest rates after the RBI’s recent 25 bps repo rate cut, your idle money could be earning less than inflation. ICICI, HDFC, and Axis Bank now offer just 2.75% per annum on balances below Rs 50 lakh — making it crucial to rethink where and how you park your cash.
“Reduction of savings account interest rates for balances under Rs 50 lakh is a clear signal for savers to reassess how they’re managing idle cash. When real returns are eroded, keeping large sums in low-yield savings accounts is no longer efficient. There are better ways to put your surplus funds to work. Start with sweep-in FD options like HDFC’s Money Maximiser, which automatically channels excess balances into fixed deposits, giving you higher returns while maintaining liquidity. Then there are liquid and ultra-short-term mutual funds, which invest in short-term debt instruments and can generate yields in the range of 5%–7% annually. These are suitable for those comfortable with modest market exposure,” said Anand K Rathi, co-founder of MIRA Money.
He added: “Digital-first banking platforms also present interesting opportunities, often offering 6%–7% returns on savings through tie-ups with traditional banks. Of course, these come with a slightly higher risk, and investors should evaluate their comfort level. The key is to find the right balance. Maintain enough liquidity for emergencies, but deploy the rest more strategically. Even modest shifts from idle to active cash management can significantly improve long-term outcomes.”