Kotak Mahindra Bank revised interest rates for its savings and fixed deposit accounts on May 25, 2025, due to the bank’s increasing sensitivity to account holders and investors. Here are the details of the latest interest rate revisions and how they will affect your savings.
Kotak Mahindra Bank Savings Account Interest Rate Reduction
Kotak Mahindra Bank is partially reducing interest rates on savings accounts, specifically on certain balance slabs. From April 1, 2025, the annual interest rate will be reduced from 5% to 4.75% for accounts with an average balance between 5 lakh rupees and 50 lakh rupees. The latest 25-bps cut came under the bank’s recent policy changes.
However, other slab rates would not be changed. For example, accounts having balances up to Rs 50,000 will have an annual interest of 3.50%, and accounts above Rs 50 lakh would have the same interest rate of 5.50% per annum.
These changes are in line with changes within the banking industry, other banks having made the same move because of changes in the economic environment.
IDBI Bank Also Cuts Rates on FD
IDBI Bank has done its part by changing its interest rates on Fixed Deposits (FDs) under the Utsav Special FD scheme. Particularly, rates have changed on special fixed deposit terms of 444 days, 555 days, and 700 days. Although the bank has watched the drop in rates on the scheme, an existing period has been extended for making investments until June 30, 2025, as opposed to the earlier deadline of April 30, 2025.
The trend is part of a larger trend in which many banks are revising their FD rates. Therefore, investors need to hurry and invest before the changes take place.
Interest Rate Reduced by Ujjivan Small Finance Bank
Besides Kotak Mahindra Bank and IDBI Bank, Ujjivan Small Finance Bank has also reduced FD interest rates. Ujjivan has slashed from 5 to 20 basis points for certain tenure slabs on FDs of less than Rs 3 crore.
Here is a glimpse of revised interest rates:
- Thus, FDs below 12 months will now attract interest of 7.90%, reduced from 8.10%.
- The 18-month FD will yield 8.05%, reduced from 8.25%.
- For senior citizens, Ujjivan Small Finance Bank continues to offer an additional 0.50% interest across all FD tenures, ensuring that older investors can still benefit from higher returns.
What is the Current Cause of Such a Rate Change?
The rate changes among different banks illustrate a larger ongoing adjustment within the banking sector. The inflation, the government’s policy, and changes in market conditions all contribute to affecting the behaviour of interest payments by financial institutions. While reduced rates may deliver unproductive returns for savers and fixed depositors, they reflect the overall changing economic environment.