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Home >Money >Personal Finance >IDFC First Bank cuts rate on savings account: Options for retail depositors

IDFC First Bank was the only bank that used to offer 6% interest rates to small depositors -– those maintaining a balance of below 1 lakh. The bank would offered it to all depositors maintaining a balance of up to 1 crore. But from 1 May, the bank has lowered its interest rates on the savings account.

Taking a cue from its peer, the bank now has different tiers. It will offer 4% for those who maintain balances below 1 lakh. Those maintaining a balance between 1 lakh and less than 10 lakh, the interest rate will be 4.5%. The highest interest rate of 5% is given to those who maintain a balance between 10 lakh and below 2 crore.

So, which banks now offer higher interest rates on a savings account?

Large private sector banks, like ICICI Bank, offer a 3-3.5% interest rate. Public sector banks, too, offer similar rates. Some, like the State Bank of India, offer even lower rates of 2.7%.

Some mid-sized private banks and small finance banks offer better rates of savings account.

FOR BALANCES UP TO RS 1 LAKH

Fincare Small Finance Bank: 5%

RBL Bank: 4.75%

ESAF Small Finance Bank: 4%

IDFC First Bank: 4%

Suryoday Small Finance Bank: 4%

Ujjivan Small Finance Bank: 4%

AU Small Finance Bank: 3.5%

Equitas Small Finance Bank: 3.5%

Jana Small Finance Bank: 3.5%

Bandhan Bank: 3%

FOR BALANCES ABOVE RS 1 LAKH

Equitas Small Finance Bank: 7%

(Above 1 lakh and up to 2 crore)

Ujjivan Small Finance Bank: 7%

(Above 1 lakh and up to 25 lakh)

Fincare Small Finance Bank: 6.25%

(Above 1 lakh and up to 5 lakh)

Suryoday Small Finance Bank: 6.25%

(Above 1 Lakh and up to 10 lakh)

Bandhan Bank: 6%

(Above 1 lakh to 10 crore)

Jana Small Finance Bank: 6%

(Above 1 lakh and up to 10 lakh)

RBL Bank: 6%

(Above 1 lakh and up to 10 lakh)

ESAF Small Finance Bank: 5.5%

(Above 1 lakh and up to 10 lakh)

AU Small Finance Bank: 5%

( 1 lakh to less than 5 lakh)

IDFC First Bank: 4.5%

( 1 lakh and below 10 lakh)

Do keep in mind that most banks have a tier system for offering interest rate. Take IDFC Bank as an example. If your account balance is 25,000, the interest payable will be 4% on the entire 25,000.

If the account balance is 5 lakh, the bank will calculate interest payable in two parts. It will pay an interest of 4% on 1 lakh. The remaining amount ( 4 lakh) will earn an interest of 4.5%.

(Do you have personal finance queries? Send them to mintmoney@livemint.com and get them answered by industry experts)

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