Savings accounts in India are maintained by a good chunk of people for meeting their day-to-day banking needs. Historically, while interest rates on savings accounts by banks in India have come down substantially, depositors with high balances are still able to offset it to some extent, as some banks are now offering tiered or structured interest rates on the varying balance amounts.
Furthermore, a couple of factors influence a bank's savings account interest rate determination, including the overall interest rate environment and the current repo rate, the bank's liquidity requirement, its cost of funds, and competition in the market, etc.
Below are the interest rates on offer on savings bank (S/B) accounts across India.
Savings account interest rate across major public sector banks in India
| Bank | Interest rate per annum |
|---|---|
| State Bank of India | 2.5% |
| Bank of Baroda | 2.5-4.75% |
| Punjab National Bank | 2.5-4.25% |
| Union Bank of India | 2.5-6.25% |
| Canara Bank | 2.55-4% |
Savings account interest rate across major private sector banks in India
| Bank | Interest rate per annum |
|---|---|
| HDFC Bank | 2.50% |
| ICICI Bank | 2.50% |
| Axis Bank | 2.5% and for balances over ₹2000 crore, MIBOR rate + 1.01% spread |
| Kotak Mahindra Bank | 2.50% |
| IDFC First Bank | 2.5-6.5% |
| DCB Bank | 1.5-6.85% |
Savings account interest rate across major Small Finance banks in India
| Bank | Interest rate per annum |
|---|---|
| AU Small Finance Bank | 2.5-6.75% |
| Ujjivan Small Finance Bank | 2.5-7.1% |
| Equitas Small Finance Bank | 2.5-7% |
| CSB Bank | 2.1-7.4% |
| Jana Small Finance Bank | 2.5-7% |
Note: Interest rates are fetched from individual bank websites, and the rate higher than the base rate is on the incremental balance as per the bank's specification.
Should account holders be maintaining large balances in savings accounts?
Ideally, one should be holding only as much as 3-6 months of essential expenses in the savings account. This is because it does not account as a main investment vehicle and fails to beat inflation and even offer good returns if you continue to maintain exceptionally high balances over a longer course of time.