Kotak Mahindra Bank savings account interest rates slashed by 0.5 pct

Private sector lender Kotak Mahindra Bank (KMB) has slashed the interest rate on savings deposits by a further 0.50 per cent. This means that customers of the bank will get lesser returns on their savings. This is the third cut by the bank in last two months. It had reduced the rate twice last month on its deposit rate offering on the savings accounts. 

From Monday, daily balance of over Rs 1 lakh will earn 4 per cent interest as against the 4.50 per cent earlier, while those under that threshold will earn 3.50 per cent, the bank said. The revisions are applicable for deposits in residents accounts only, it said. 

The banking system is under some stress and deposit rates are being reduced by many banks with the interest rate lowering by the Reserve Bank of India and a lack of loan growth where the money can be deployed.

Largest lender SBI offers an interest rate offering of as low as 2.75 per cent on the savings bank deposits, while others like Yes Bank, which also has an aggressive strategy, have hinted at the possibility of lowering the rates in near future. During a recent media call, Uday Kotak, the lender's managing director, had counted deposit accretion as among the key focus areas for the bank amid the COVID-19 pandemic crisis.

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KMB was among banks - like Yes Bank, IndusInd Bank and DBS - to offer higher pricing on savings deposits that had peaked at 7 per cent for the past many years.

Meanwhile, the bank informed that it has the consent of its shareholders by way of postal ballot in electronic form for raising of capital through issuance of 6.5 crore equity shares of Rs 5 each. The bank, however, did not give a time frame for completing this capital raising plan. On account of the threat posed by COVID-19, the bank had sent the postal ballot notice in electronic form only to all its eligible shareholders as on Friday, April 17, 2020.