Kotak Mahindra Bank savings account interest rates cut to 5 per cent from 6 per cent earlier

Private sector lender Kotak Mahindra Bank on Monday reported a healthy jump in deposit base for the March quarter, and announced a reduction in savings account interest rates for high value customers.

The bank witnessed an 11.7 per cent rise in customer deposits and a 1.3 per cent jump in advances during the March quarter, as against the quarter ended December 31, 2019, an official statement said.

It can be noted that its peers including RBL Bank and Indusind Bank have witnessed a dip in deposits during the quarter.

The bank has reduced the rate offered for deposits of over Rs 1 lakh in the savings account to 5 per cent from the 6 per cent earlier, while those under Rs 1 lakh will continue to earn 4 per cent, an official statement said.

It can be noted that banks typically maintain a healthy credit-deposit ratio to ensure that their margins are protected.

The bank's chief communication officer Rohit Rai said the Reserve Bank of India has decided to cut rates to support the Indian economy and extend support to government's effort to fight the Covid-19 pandemic and the bank has reviewed the rate in a falling rates scenario.

"Even after the cut in interest rates, we continue to offer higher than industry average on savings accounts in the Indian banking sector," he said.

The cut in rates is effective from April 1. It can be noted that largest lender SBI has also gone for a similar review.

In the January-March period, the lender's current account deposits grew 16.9 per cent on a quarter-on-quarter basis, while the savings bank deposits were up 14 per cent.

The share of the low cost current and savings accounts deposits in the overall deposit base rose to 56.2 per cent as on March 31, as against 53.7 per cent in December quarter and 52.5 per cent in the year-ago period.

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A slew of banks, especially those in the private sector space, have been disclosing limited set of results over the past week, to allay investor concerns in the aftermath of the Covid-19 crisis and also clear doubts on their health in the wake of the Yes Bank crisis.

The bank scrip closed 1.98 per cent down at Rs 1,158.20 a piece on the NSE on Monday.