Kotak Mahindra Bank has reduced its savings account rates by 25 basis points (bps) with effect from April 25, 2025. This action is effective on certain balance slabs, which is consistent with current market conditions because banks realign their rate structure.
Balances between ₹5 lakh and ₹50 lakh – Now earn 4.75% per annum, reduced from 5%.
The Balances of ₹50,000 and below – Rate of interest unchanged at 3.50% per annum.
Balances over ₹50 lakh – Still earn 5.50% per annum.
Impact on Customers
This change brings to customers holding mid-balance accounts a moderate decrease in their returns. Customers who hold lesser or higher deposits, however, are not subjected to this effect. Differential interest rates according to account balance are still offered by the bank with competitive returns offered to varying segments of customers.
Fixed Deposit Rate Changes
Apart from saving account adjustments, Kotak Mahindra Bank lowered fixed deposit (FD) rates by as much as 30 bps on some tenors. The new FD rates became effective from April 23, 2025, and Kotak Mahindra Bank has lowered FD rates for the second time in this month.
Industry-Wide Trend
Kotak Mahindra Bank’s action is followed by the same being replicated by other banks. IDBI Bank, Ujjivan Small Finance Bank and Indian Bank have also raised their interest rates considering shifting market scenarios and the recent repo rate reduction by the Reserve Bank of India (RBI).
What This Means for Account Holders
As rates on savings accounts fall, customers might have to look elsewhere to earn the maximum returns. Fixed deposits, mutual funds, and high-yield savings plans can prove more cost-effective in the prevailing economic conditions.
Kotak Mahindra Bank’s rate hike is a reflection of wider monetary policy changes, aligning with changing financial trends. Customers need to remain vigilant and alter their savings plan accordingly.
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