Private sector lender Federal Bank raised interest rates on savings bank deposits. Interest rates on the bank’s savings accounts are linked to the repo rate and on June 8, 2022, RBI raised the repo rate by 50 basis points from 4.40% to 4.90%, in Accordingly, the interest rate on Federal Bank savings accounts also rose on June 9, 2022.
The Federal Bank mentioned on its website that “As the interest rates are linked to the Repo rates, the interest rates will change as the Repo rate is revised by RBI on a T+1 basis.”
Federal Bank Savings Account Interest Rates
On savings bank deposits of less than ₹5 crore, the applicable interest rate is 2.15% lower than the RBI repo rate of 4.9%, implying that the interest rate will be 2.75%. On the savings account balances of ₹5 crores and above, the applicable rate of interest is 2.15% below the RBI repo rate for amounts up to and including ₹1 lakh and 0.90% below RBI repo rate for higher amounts ₹1,000,000. These rates will be calculated on the basis of daily end-of-day balances and paid quarterly to holders of savings accounts with the bank.
“The above mentioned rates will be calculated on the daily end-of-day balances maintained in the savings bank accounts (resident/NRE/ONR) and the same will be credited to the respective accounts on a quarterly basis,” said the bank on its website.
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Savings account customers will be pleased to hear that Kotak Mahindra Bank has increased interest rates on savings accounts, effective June 13, 2022. Savings account deposits up to ₹50 lakh will enjoy an interest rate of 3.5% per annum, but daily savings account balances above ₹50 lakh will pay 50 basis points higher interest rate of 4% per annum from the previous rate of 3.5% per annum. Interest rates are currently on the upswing after the RBI raised the repo rate at its June MPC meeting. Banks may announce further interest rate hikes on loan and deposit products soon, but in the meantime, lenders such as PSB, Central Bank of India, Indian Overseas Bank, Karnataka Bank and RBL Bank have raised interest rates on fixed deposits following the rise in the repo rate.
