Syndicate Bank, one of the oldest commercial banks in India, has lowered its savings account interest rate by 0.5%. Based on this revision, the interest rate will now be 3.5% for savings accounts with deposits up to Rs.25 lakh. The revised interest rate will come into effect from October 10, 2017. For accounts with deposits above Rs.25 lakh, the interest rate will continue to remain at 4%.
The revised rate is in line with the interest rates of the other public and private sector banks in the country. In August 2017, India’s largest lender State Bank of India (SBI) lowered its interest rate to 3.5% for savings accounts with deposits below Rs.1 crore.
Recently, banks have been cutting interest rates for savings accounts in a bid to promote other types of investments by their customers. Most private and public sector banks in the market now offer an interest rate of 3.5% for savings accounts with deposits less than Rs.50 lakh. After the deregularization of interest rates by the Reserve Bank of India in 2011, banks are allowed to fix interest rates for savings accounts according to their own will.
Among the banks that offer better interest rates, RBL Bank tops the list with 5.5% interest rate for savings accounts with deposits up to Rs.1 lakh. Yes Bank and Kotak Mahindra offer 5% for accounts with deposits up to Rs.1 lakh and 6% for accounts with deposits more than Rs.1 lakh. A few other banks including Bandhan Bank, IndusInd Bank, and Laxmi Vilas Bank also offer interest rates higher than 3.5% for their savings accounts.
Most financial experts believe that savings accounts are not meant to be used as investment tools. According to them, savings accounts must be used for keeping surplus funds in the short-term till an appropriate investment source is found.
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